In Asian trading hours today, the British pound reached its highest level against the Japanese yen in over a week, only to later give up some of those gains. The GBP/JPY pair, which had climbed to near 187.65, retreated to approximately 187.25. This fluctuation came as investors reacted to expectations of a shift in the Bank of Japan's (BoJ) negative interest rate policy by early next year. Despite a decline, Japan's core consumer inflation figures remain above the central bank's target, suggesting persistent inflationary pressures.
The yen found support as Asian equity markets indicated a risk-off sentiment among investors. Meanwhile, comments from Bank of England (BoE) Governor Andrew Bailey earlier this week have continued to influence market dynamics. Speaking at a Treasury Select Committee hearing, Bailey underscored the need for ongoing restrictive monetary policy to address inflation concerns, which has bolstered the sterling.
Further supporting the British currency were recent economic indicators from the United Kingdom. The robust Services and Composite indices from recent UK Purchasing Managers' Index (PMI) readings have pointed towards continued economic expansion, providing a buffer against more significant drops in the GBP/JPY exchange rate.
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