GBP/JPY Rises Despite BOJ's Ueda Reaffirming Hawkish Stance

During Friday's European trading session, GBP/JPY strengthened, trading near 210.59, up approximately 0.4% on the day. Bank of Japan Governor Kazuo Ueda reiterated a hawkish stance favoring continued rate hikes at his press conference that day, but the yen failed to gain support, with Asia-Pacific currencies broadly weaker, which instead propelled GBP/JPY higher.

**Ueda's Hawkish Remarks Fail to Reverse Yen Weakness**

Ueda conveyed a more assertive posture toward rate hikes following the monetary policy meeting, with the BOJ raising its policy rate from 1% to 1.25%. However, the market was unconvinced, with the yen falling to the upper 157 range against the dollar by Friday evening, down 1.2% from the New York close. Analysts noted that Ueda's remarks lacked sufficiently clear hawkish signals to meet the market's overly aggressive expectations, and with the dollar rebounding, the yen's near-term downward pressure persists.

**Diverging Views on Yen Outlook**

Some institutions remain cautious on the yen's near-term trajectory. Chidu Narayana, Head of Asia-Pacific Strategy at Wells Fargo, believes Ueda's hawkishness is insufficient to underpin market expectations, keeping USD/JPY elevated. Gerald Gan, Chief Investment Officer at Reed Capital, also stated that the yen will remain weak in the short term, citing the divergence in forward guidance between the BOJ and the Federal Reserve as a key concern for yen stability. However, Masahiro Yamaguchi, Head of Investment Research at SMBC Trust Bank, holds a relatively optimistic view, arguing that Ueda successfully defused the risk of a sharp yen selloff at the press conference, with the market still pricing in a rate hike every three months, preventing the yen from entering a prolonged depreciation trend.

**Sterling Factors and Cross-Pair Dynamics**

The rise in GBP/JPY is driven more by one-sided yen weakness than by a significant improvement in sterling's own fundamentals. With the yen broadly softening against major currencies, sterling, as a relatively higher-yielding currency, has attracted cross-pair buying support. Masahiko Loo, Senior Fixed Income Strategist at State Street Investment Management, pointed out that as structural factors—such as rising domestic yields from BOJ policy normalization and institutional capital flows back into Japanese assets—gradually take hold, the yen's medium-to-long-term trajectory could gain support. However, in the near term, no clear reversal signal has emerged in the yen's weak trend.