GBP/JPY remains above 192.00 as receives support from risk-on sentiment

• GBP/JPY appreciates as market sentiment improves following reports of incoming Trump administration considering a gradual increase in import tariffs.
• The Japanese Yen struggles due to ongoing uncertainty regarding the timing of the BoJ's next rate hike.
• The Pound Sterling could face challenges due to concerns over stagflation in the United Kingdom.

GBP/JPY breaks its five-day losing streak as the Pound Sterling (GBP) strengthens, driven by improved investor confidence following reports that US President-elect Donald Trump's economic team is considering a gradual increase in import tariffs. This prospect weakens the safe-haven Japanese Yen (JPY), providing support for the risk-sensitive Pound. As a result, the GBP/JPY cross appreciates, trading around 192.30 during the Asian session on Tuesday.

On Monday, a Bloomberg report highlighted that Trump's incoming administration is evaluating a phased approach to implementing tariffs, aiming to prevent a sharp rise in inflation while managing trade policy adjustments.

Additionally, the GBP/JPY cross appreciates as the Japanese Yen (JPY) faces pressure amid uncertainty over the timing of the Bank of Japan's (BoJ) next rate hike. Market participants speculate that the BoJ may delay raising rates until April, awaiting confirmation of sustained wage growth during the spring negotiations.

Bank of Japan Deputy Governor Ryozo Himino stated on Tuesday that he would not directly link President Trump's inauguration address to the BoJ's decision on whether to raise rates in January. Himino emphasized that when the right time comes, the BoJ must adjust its policy without delay.

Regarding Trump's address, Himino expressed the intention to closely analyze the schedule and balance of the new US administration's policy measures and to see if any new information not previously communicated would emerge.

However, the upside of the GBP/JPY cross could be restrained as the Pound Sterling (GBP) may struggle due to concerns over stagflation in the United Kingdom (UK) amid persistent inflation and stagnant economic growth.

Additionally, a recent surge in UK government bond yields has sparked worries about the country's fiscal health. Investors have been offloading UK gilts, driven by fears of mounting debt, sluggish growth, and inflation risks. These concerns contribute to the GBP's relative weakness.