GBP/JPY rises to near 199.00 as BoJ rate cut bets ease

• GBP/JPY gains ground amid easing likelihood of further rate cuts by the BoE.
• BoE's Mann favors maintaining higher interest rates to curb inflation risks.
• Japan's Akazawa Ryosei will return to the United States on Thursday for talks.

GBP/JPY gains ground after registering losses in the previous session, trading around 198.80 during the European hours on Wednesday. The currency cross appreciates as the Pound Sterling (GBP) receives support as traders expect the Bank of England (BoE) to avoid further rate cuts. The market caution is attributed to the persistent inflationary pressures.

Catherine Mann, a member of the BoE Monetary Policy Committee (MPC), said on Tuesday that the bank rate should be held persistently to lean against inflation risks. She also stated, "I stand ready for a forceful policy action, in the form of larger, more rapid Bank Rate cuts, should the downside risks to domestic demand start materializing."

The upside of the GBP/JPY cross could be limited as the Japanese Yen (JPY) could gain ground amid increasing stability in Japanese domestic politics, amid improving public approval. Yomiuri newspaper public opinion poll showed on Monday a 20% rise in support for Japanese Prime Minister Shigeru Ishiba despite his ruling coalition losing its majority in July's parliamentary election.

Asahi TV reported on Wednesday that Japan's head trade negotiator, Akazawa Ryosei, is heading back to the United States (US) on Thursday to discuss Japanese investment in the US. Traders await upcoming economic releases later this week, including Japan's Tokyo Consumer Price Index (CPI), Retail Trade data due on Friday, which could shape expectations for BoJ policy outlook.