GBP/JPY picks up and returns to 202.50 on BoJ's dovishness

• The Pound bounces up against a weaker Yen and returns to the mid-range of the 202.00s
• BoJ's decision to keep rates on hold disappointed investors ans sent the Yen Tumbling.
• The Pound had sold off earlier this week amid fresh concerns about UK's public finances.

The Pound is retracing previous losses against a weaker Japanese Yen on Thursday, as the Bank of Japan (BoJ) met expectations and stood pat on interest rates. The pair has bounced up from three-week lows at 200.57 to reach session highs right above 202.50 at the European session opening times.

The BoJ kept its benchmark interest rate unchanged at 0.5% for the sixth consecutive time and reaffirmed its commitment to continue tightening monetary policies if economic projections are met. Investors, however, have been disappointed, as the number of dissenting votes calling for a rate hike remained at two, and have sent the Yen tumbling across the board.

Ueda strikes a dovisn note

BoJ Governor Kazuo Ueda's press release has failed to provide any significant support to the Yen. Ueda assessed that economic growth is likely to be modest as trade policies lead to a slowdown in global growth and that underlying inflation will gradually increase, to reach levels in line with the target of price stability in the mid-term.

The outlook on monetary policy, however, has been tilted to the dovish side, as the BoJ Governor played down concerns of falling behind the curve with interest rate hikes and said that he has no present ideas about the timing of the next interest rate hike.

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