- The GBP/JPY attracts sellers for the second consecutive day as the demand for sure refuge drives the YEN.
- Divergent expectations of BOJ and BOE policy exert additional pressure on cash prices
- A bassist USD provides some support to the pound sterling and could help limit additional losses for the crossing.
The GBP/JPY crossing meets a new offer after a rebound in the Asian session towards the region of 188.75 and becomes negative for the second consecutive day on Tuesday. Cash prices go back below the 188.00 mark, reaching a minimum of three days in the last hour, and seem vulnerable to weakening even more in the middle of a sustained purchase around the Japanese Yen (JPY).
Investors remain in suspense before the persistent uncertainties around the high tariffs of US President Donald Trump and concerns that the erratic commercial war pushes the global economy towards a recession. To this are added the hopes of a commercial agreement between the US and Japan and the bets that the Bank of Japan (BOJ) will continue to raise interest rates, which supports the Yen of safe refuge, which, in turn, is considered to exert the downward pressure on the GBP/JPY crossing.
It is reported that the BOJ plans to point out next week that there is almost no need to change its basic position on the increase in interest rates, since the potential impact of increased American tariffs will not interrupt the current cycle of salary growth and inflation. This adds to government data published last Friday, which showed that the underlying consumer price index (CPI) of Japan accelerated in March and pointed to an expanding inflation in Japan.
In contrast, operators have made a great commitment to the Bank of England (BOE) will reduce interest rates amid increasing concerns about economic repercussions of Trump’s commercial tariffs. This marks a great divergence compared to the hard line expectations of the BOJ, which support the perspectives of greater depreciation of the GBP/JPY crossing. However, the sustained sale of USD provides support for sterling pound (GBP) and could help limit deeper losses.
FAQS tariffs
Although tariffs and taxes generate government income to finance public goods and services, they have several distinctions. Tariffs are paid in advance in the entrance port, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and companies, while tariffs are paid by importers.
There are two schools of thought among economists regarding the use of tariffs. While some argue that tariffs are necessary to protect national industries and address commercial imbalances, others see them as a harmful tool that could potentially increase long -term prices and bring to a harmful commercial war by promoting reciprocal tariffs.
During the election campaign for the presidential elections of November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy. In 2024, Mexico, China and Canada represented 42% of the total US imports in this period, Mexico stood out as the main exporter with 466.6 billion dollars, according to the US Census Office, therefore, Trump wants to focus on these three nations by imposing tariffs. It also plans to use the income generated through tariffs to reduce personal income taxes.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
