The GBP/JPY currency pair advanced to a fresh 15 1/2-year high of 195.965 on Friday, after the Bank of Japan maintained its short-term interest rate intact at around 0% to 0.1% at its April meeting, in line with market expectations.
The central bank also stuck with its March guidance to continue purchasing government bonds around the current pace.
Yet, there was no clear guidance on the future rate hike trajectory, which drove the Yen down to fresh lows, while market players remained on edge about possible BoJ intervention.
In March, the Bank of Japan put an end to an eight-year period of negative interest rates and discontinued yield curve control for 10-year government bonds.
In its quarterly outlook, the central bank revised up its full-year 2024 CPI inflation forecast to 2.8% from 2.4% as projected in January, because of the waning effects of higher import prices and fewer government support measures.
With regard to 2025, the BoJ expects core inflation to rise to 1.9%, compared to a previous forecast of 1.8%, due to a recent surge in oil prices.
“The currency takeaway is certainly disappointment from the lack of guidance from the bank,” Rodrigo Catril, senior Forex strategist at National Australia Bank, was quoted as saying by Reuters.
“To me the currency market is telling us it believes that the BOJ policy is too loose and hence why the currency is so weak. The Bank has the ability to do something about that by changing its policy, and if it’s not going to change the policy, then we shouldn’t expect the yen to strengthen.”
Currency Pair Performance
As of 7:16 GMT on Friday the GBP/JPY currency pair was gaining 0.54% to trade at 195.816.
Earlier in the session, the minor Forex pair went up as high as 195.965. The latter has been the pair’s strongest level since September 25th 2008 (197.203).