The GBP/JPY cross extends its robust rally for the third consecutive day on Thursday, surging to the vicinity of 195.00 during the initial half of the European trading session, marking its highest level since August 2015.
Despite verbal admonitions from Japanese authorities in recent days, the absence of concrete actions and the Bank of Japan‘s (BoJ) prudent stance towards additional policy tightening exert continued downward pressure on the Japanese Yen (JPY). Concurrently, a notable uptick in demand for the British Pound (GBP), buoyed by a mild weakness in the US Dollar (USD), serves as a catalyst, propelling the GBP/JPY cross to higher altitudes.
The ascending trajectory is further propelled by technical buying subsequent to the breakout above the 192.80-192.85 supply zone overnight, coupled with sustained strength beyond the previous year-to-date peak, located around the 193.50-193.55 region. However, the market now awaits with bated breath the forthcoming Bank of Japan (BoJ) decision, slated for announcement on Friday, to gauge the durability of the bullish momentum and ascertain whether it stems from authentic demand or signifies a stop run.
In the interim, a marginally softer tone surrounding equity markets may offer some respite to the safe-haven appeal of the JPY. Additionally, speculation that the Bank of England (BoE) might initiate interest rate cuts as early as June could pose as a headwind for the GBP. With the impending central bank event risk looming large, a prudent approach is warranted amid the current fundamental landscape, prior to positioning for potential further appreciation in the GBP/JPY cross.
