GBP/JPY dives further, nears 201.00 as the Yen firms up

• The Pound extends losses, reaching fresh three-week lows near 201.00
• Fresh concerns about the UK's public finances are weighing on the Pound.
• US Treasury Secretarythe Bessent assured that Japanese authorities will respect the BoJ's independence.

The Pound remains heavily offered against the Japanese Yen for the second consecutive day on Wednesday. The pair depreciated about 1.34% in the last two days, retreating from levels above 204.00 to three-week lows near 201.00 at the time of writing.

The Sterling was hammered on Tuesday after the UK Office for Budget Responsibility (OBR) slashed its productivity growth forecasts for the next five years by 0.3%, likely adding a GBP 20 billion hole to the already strained public finances.

Furthermore, a gauge of UK shop inflation showed a significant moderation in price pressures, confirming the disinflationary pressures revealed at September's Consumer Prices Index release, and keeping hopes of further BoE monetary easing alive.

The Yen, on the other side, has received a boost from US President Donald Trump, who has praised Japanese Prime Minister Sanae Takaichi, after their meeting on Tuesday, and comments from US Treasury Secretary Bessent, assuring that the Japanese authorities will not threaten the Bank of Japan's independence.

The BoJ is widely expected to keep its benchmark interest rate on hold after its meeting on Thursday, but Bessent's words have boosted hopes of a rate hike in December or January, which has given a fresh impulse to the Yen.