GBP/JPY trades with positive bias above 197.00 mark, lacks bullish conviction

• GBP/JPY regains positive traction on Wednesday amid a modest JPY weakness.
• The BoJ rate-hike uncertainty, domestic political uncertainty undermine the JPY.
• Intervention fears help limit JPY losses and cap the cross ahead of BoE's Mann.

The GBP/JPY cross attracts some dip-buying in the vicinity of the weekly low, around the 196.85-196.80 region, and reverses a part of the previous day's losses. Spot prices, however, remain confined in a familiar range and currently trade around the 197.30-197.35 area, up less than 0.15% for the day.

The Japanese Yen (JPY) continues with its relative underperformance amid the uncertainty about the Bank of Japan's (BoJ) rate-hike plans and turns out to be a key factor acting as a tailwind for the GBP/JPY cross. Investors now seem convinced that Japan's political landscape could make it difficult for the BoJ to tighten its monetary policy further. This, to a larger extent, overshadows a rise in Japan's Producer Price Index (PPI) by the highest annual rate since July 2023, reflecting sustained inflationary pressure. 

However, speculations that Japanese authorities might intervene in the FX market to prop up the domestic currency and a softer risk tone help limit losses for the safe-haven JPY. The British Pound (GBP), on the other hand, struggles to gain any meaningful traction on the back of mixed UK employment details on Tuesday. This, in turn, might hold back traders from placing aggressive directional bets around the GBP/JPY cross, warranting some caution before positioning for any further appreciating move. 

Market players now look forward to a scheduled speech from the Bank of England's (BoE) Monetary Policy Committee external member Catherine Mann for some impetus. Apart from this, the broader risk sentiment might influence demand for the safe-haven JPY and contribute to producing short-term trading opportunities. Nevertheless, the mixed fundamental backdrop makes it prudent to wait for a sustained move in either direction to confirm the near-term trajectory for the GBP/JPY cross.