GBP/JPY climbs back closer to mid-202.00s as Japan's political landscape weigh on JPY

• GBP/JPY regains positive traction on Tuesday as a combination of factors exert pressure on the JPY.
• Takaichi becomes Japan's next PM, fueling bets for more fiscal stimulus and loose monetary policy.
• The still divergent BoJ-BoE expectations might hold back bulls from placing fresh bets and cap gains.

The GBP/JPY cross attracts fresh buyers following the previous day's two-way price moves and climbs closer to mid-202.00s during the Asian session on Tuesday. Spot prices, however, remain confined in a familiar range held over the past week or so, warranting caution before positioning for an extension of the recent bounce from last Friday's swing low, around the 200.65 region.

The Japanese Yen (JPY) extends its steady intraday descent after lawmakers in the Lower House have voted for Sanae Takaichi to become Japan's first female Prime Minister. Investors have been speculating that Takaichi would announce more expansionary policy in Japan., which could allow the Bank of Japan (BoJ) to further delay raising interest rates . This, in turn, is seen weighing on the JPY and acting as a tailwind for the GBP/JPY cross.

That said, Takaichi would still need cooperation from other opposition groups to pass any legislation as the fragile new coalition remains short of the 233 needed for a simple majority. Moreover, investors seem convinced that the BoJ will stick to its policy normalization path as inflation in Japan remains at or above the central bank's 2% target for more than three years, and the economy registered growth for a fifth straight quarter through June.

The relatively hawkish BoJ expectations mark a significant divergence in comparison to bets that the Bank of England (BoE) could continue cutting rates gradually. Adding to this, worries about the UK's fiscal outlook ahead of the crucial Autumn budget in November might hold back traders from placing aggressive bullish bets around the British Pound (GBP). This, in turn, could keep a lid on any maeningful appreciation for the GBP/JPY cross.