GBP/JPY extends rally to near 195.00 as safe-haven demand for Yen diminishes

• GBP/JPY advances as improved US-China trade relations reduce safe-haven demand for the Japanese Yen.
• A joint statement from both countries emphasized the significance of their bilateral economic and trade partnership.
• The Pound Sterling strengthened after the BoE reaffirmed its "gradual and cautious" stance on monetary easing last week.

GBP/JPY is extending its upward momentum for the fourth consecutive session, trading around 194.90 during European hours on Monday. The currency cross is gaining as the Japanese Yen (JPY) weakens following positive developments in US-China trade relations, which have reduced demand for safe-haven assets.

A joint statement from the US-China Economic and Trade meeting in Geneva highlighted the two nations' recognition of the importance of their bilateral economic and trade relationship, not only for their economies but also for global stability. Both sides emphasized their commitment to a sustainable, long-term, and mutually beneficial partnership.

US Treasury Secretary Scott Bessent underscored the significance of the agreement, announcing a 90-day freeze on tariff escalation along with a substantial 115% reciprocal tariff reduction. Meanwhile, US Trade Representative Jamieson Greer acknowledged that the previous embargo approach was unsustainable, reaffirming both countries' commitment to the temporary pause, though he noted that the fentanyl issue remains unresolved.

However, losses in the JPY may be limited due to supportive domestic data. Japan's non-seasonally adjusted current account surplus rose to JPY 3,678.1 billion in March, up from JPY 3,447.8 billion a year earlier and largely in line with forecasts. Trade Balance - BOP Basis reported that goods account surplus widened to JPY 516.5 billion from JPY 463.5 billion, driven by a 1.8% year-on-year rise in exports, which outpaced the 1.3% increase in imports.

The British Pound (GBP) is also trading stronger against major currencies after the Bank of England (BoE) maintained its "gradual and cautious" approach to monetary easing in its policy announcement last Thursday. The BoE cut interest rates by 25 basis points to 4.25%, in line with expectations, though the decision saw a split vote--Monetary Policy Committee (MPC) member Catherine Mann and Chief Economist Huw Pill voted to keep rates unchanged.

On Friday, Pill explained his dissent, citing expectations that long-term domestic pressures could stoke inflation. He also downplayed the potential impact of global trade risks on the UK economy, stating, "We're not seeing a dramatic shift in the UK economy following recent tariff announcements."