The GBP/JPY currency pair witnessed a rebound near the 190.85-190.80 support zone on Tuesday, subsequently surging to a fresh daily high during the initial half of the European trading session. Presently hovering around the 191.60 mark, spot prices are poised to extend gains following an overnight bounce from a one-week low.
The British Pound (GBP) received a notable boost following the release of the flash UK Services Purchasing Managers’ Index (PMI), surpassing expectations by rising to 54.9 in April from the prior month’s final reading of 53.1. Additionally, a modest decline in the US Dollar (USD) predominantly outweighed the unexpected contraction in the UK manufacturing sector, serving as a significant tailwind for the GBP/JPY cross.
Conversely, the Japanese Yen (JPY) continued its subdued performance amid the Bank of Japan‘s (BoJ) cautious stance toward further policy tightening. Moreover, optimism surrounding the Iran-Israel conflict’s containment supported an overall positive risk sentiment, further undermining the safe-haven appeal of the JPY and offering additional support to the GBP/JPY pair.
Traders remain vigilant amid speculations of potential intervention by Japanese authorities to bolster the domestic currency. This cautious sentiment among JPY bears limits aggressive positioning ahead of the critical BoJ policy decision scheduled for Friday. Meanwhile, expectations of more assertive policy easing by the Bank of England (BoE) could potentially restrain the upside momentum for the GBP/JPY cross in the near term.
