GBP/JPY is looking for direction near 202.50 after rejection at 203.00

• The Pound remains steady right below multi-year highs, at 203.00.
• The Yen remains on the defensive amid expectations that Takaichi will bring Abenomics back
• Japan's finance minister Kato warned he will closely monitor FX markets and provided some support to the Yen.

The British Pound consolidates in the mid-range of the 202.00s on Tuesday, following a rejection from all-time highs at multi-year highs near 203.00, following comments from Japanese Finance Minister Katsunobu Kato, who affirmed that he will closely monitor foreign exchange markets.

The Yen plummeted more than 300 pips on Monday's early trading after the victory of the pro-stimulus LDP candidate, Sanae Takaichi, who is expected to boost fiscal spending and hamper the Bank of Japan's plans to tighten its monetary policy.

Yen weakness raises speculation about intervention

Finance Minister Kato said on Tuesday that it is important for currencies to move in a stable manner reflecting fundamentals and that the Japanese authority will "closely monitor" currency moves. These comments pose a veiled threat of a potential intervention and have contributed to providing some footing for the Yen:

In the UK, recent data revealed a significant slowdown in the services sector, and a survey by the Bank of England showed that British businesses' hiring plans fell to their lowest levels since 2020.

These figures have raised expectations that the Bank of England might be forced to cut rates again. In that sense, the minutes of the last BoE FPC committee, and BoE's Chief Economist Huw Pill's comments will be carefully analysed to confirm those expectations on Wednesday.