Created
: 2025.05.30
2025.05.30 17:00
GBP/JPY extends its losses for the second successive session, trading around 194.00 during the European hours on Friday. The Japanese Yen (JPY) appreciates against its peers, weighing on the currency cross, after Tokyo's core inflation posted a stronger-than-expected data, reinforcing the odds of the Bank of Japan's (BoJ) 25 basis point rate hike in July.
On Friday, the Tokyo Consumer Price Index (CPI) increased 3.4% year-over-year in May, slightly softer than the previous 3.5% rise. Meanwhile, Tokyo Core CPI excluding Fresh Food came in at 3.6% YoY, following a 3.4% increase in April. The index has surpassed median market forecasts for a 3.5% gain.
The JPY also received support from the safe-haven flows after the US Court of Appeals for the Federal Circuit in Washington, on Thursday, temporarily allowed Trump's tariffs to take effect, holding a decision by a three-judge panel at the Court of International Trade in Manhattan.
On Wednesday, the federal court condemned Trump's usage of the Carter-era International Emergency Economic Powers Act (IEEPA) to justify his international agenda, quoting it as exploitation of the president's authority. The federal court found that Trump exceeded his authority in imposing broad import tariffs and declared the executive orders issued on April 2 unlawful.
The downside of the GBP/JPY cross could be restrained as the Pound Sterling (GBP) may receive support as the International Monetary Fund (IMF) raised the United Kingdom (UK) Gross Domestic Product (GDP) growth forecast for the current year to 1.2% from 1.1%.
The GBP also gains from the weakening of the probability of the Bank of England (BoE) reducing interest rates again in the June policy meeting. The hotter-than-expected UK Consumer Price Index (CPI) and a robust growth in the UK Retail Sales data for April weakened the dovish bets surrounding the Bank of England's (BoE) policy outlook.
Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.
Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.
There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.
During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.
Created
: 2025.05.30
Last updated
: 2025.05.30
FXStreet is a forex information website, delivering market analysis and news articles 24/7.
It features a number of articles contributed by well-known analysts, in addition to the ones by its editorial team.
Founded in 2000 by Francesc Riverola, a Spanish economist, it has grown to become a world-renowned information website.
We hope you find this article useful. Any comments or suggestions will be greatly appreciated.
We are also looking for writers with extensive experience in forex and crypto to join us.
please contact us at [email protected].
Disclaimer:
All information and content provided on this website is provided for informational purposes only and is not intended to solicit any investment. Although all efforts are made in order to ensure that the information is correct, no guarantee is provided for the accuracy of any content on this website. Any decision made shall be the responsibility of the investor and Myforex does not take any responsibility whatsoever regarding the use of any information provided herein.
The content provided on this website belongs to Myforex and, where stated, the relevant licensors. All rights are reserved by Myforex and the relevant licensors, and no content of this website, whether in full or in part, shall be copied or displayed elsewhere without the explicit written permission of the relevant copyright holder. If you wish to use any part of the content provided on this website, please ensure that you contact Myforex.
Myforex uses cookies to improve the convenience and functionality of this website. This website may include cookies not only by us but also by third parties (advertisers, log analysts, etc.) for the purpose of tracking the activities of users. Cookie policy