GBP/JPY returns above 196.30 after the post-BoJ reversal

• The Pound retreated against the Yen following the BoJ's decision.
• Disappointing UK figures seen last week have undermined Sterling's rally.
• The longer-term trend remains positive, with all eyes on this week's BoE decision.

The Pound extended its reversal from Monday's high at 196.85 after the Bank of Japan released its monetary policy decision on Tuesday, but, so far, the pair has remained steady above last week's highs at 196.00. The longer-term bias remains positive.

The Bank of Japan left its benchmark interest rate unchanged, at 0.5%, as widely expected, and pointed to a slowdown on bond tapering from April 2026 in a move, they say, aimed to support market stability.

BoJ Governour, Kazuho Ueda, tried to convey a neutral message, but refused to commit to any monetary tightening in the coming months. He warned about the uncertain global trade scenario and observed that inflation is not rising in an accelerated way, which might hint at a dovish tweak from previous rhetoric.

The GBP/JPY retreated after the event, but mainly due to Sterling's weakness, rather than a particular Yen strength. The Pound depreciates 0.2% against the US Dollar and 0.3% against the Euro on the day.

The UK calendar is light today, but the downbeat UK GDP, employment, and Industrial Production figures shown last week have left the GBP on the defensive ahead of Thursday's interest rate decision by the Bank of England.