GBP/JPY – Remains near highs as the BoJ stands pat in January

  • BoJ leaves the policy rate unchanged at -0.1%
  • Maintains 10-year JGB yield target around 0% with a flexible buffer of 1%
  • GBPJPY hangs around recent highs despite hints at future rate moves

The Bank of Japan opted to leave interest rates and its yield curve control policy unchanged today, indicating a decision on negative rates may come at one of the upcoming meetings.

It was always likely that no decision would be taken today as the central bank awaits the outcome of the spring wage negotiations due to take place in the coming months. For this reason, March, even April, may also come too soon and the central bank did suggest that the first move won’t necessarily come alongside new economic forecasts.

Wage negotiations will ultimately be the driving force as they will give the clearest indication of whether price pressures are filtering through to the economy in a sustainable way that will deliver 2% inflation over the medium term. After that, it becomes a question of to what extent that is occurring and how much action the BoJ will need to take in response. After decades of low to negative inflation, we probably shouldn’t expect this to be a quick process.

With the yen now rapidly falling again, does this open the door to further FX interventions from the Japanese Ministry of Finance or will it tolerate the moves on the basis that the wage negotiations may enable a more organic correction in the currency? That may well depend on just how much pain it must endure in the interim.

GBPJPY struggles near November highs

The pound has continued to trade near its recent highs after this morning’s decision from the BoJ.


Source – OANDA

There still appears to be healthy momentum with the rally, as per the stochastic and MACD which remain at their highs and even rising, and yet price action looks less convincing. We’ve seen three choppy sessions and struggles to hold onto early gains. That this also occurs near the November highs may also be a concern.

Of course, it could merely be a consolidation after such a strong rally, which is often bullish especially when back by momentum. A break below 187.30, the neckline of a potential double top on the 4-hour chart, may suggest otherwise.

GBPJPY 4-hour

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at Visit to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam