British Pound stays pressured vs Yen as risk-off mood counters hawkish BoE

The GBP/JPY cross attracts sellers for the second straight day on Friday, extending this week's retracement slide from the 23.75 region, or a two-month high. Spot prices stick to intraday losses through the first half of the European session and currently trade just above mid-211.00, down nearly 0.35% for the day amid a combination of actors.

The broader risk-off sentiment benefits the Japanese Yen's (JPY) relative safe-haven status, while the British Pound (GBP) faces headwinds from the ongoing US Dollar (USD) recovery ahead of the critical US Nonfarm Payrolls report. The JPY further draws support from the Bank of Japan's (BoJ) hawkish outlook. In fact, Minutes of the September BoJ meeting showed on Thursday that policymakers concurred it was appropriate to keep increasing the policy rate and modify the level of monetary easing, reaffirming bets for a rate hike in December and underpinning the JPY.

Meanwhile, the GBP could draw some support from the Bank of England's (BoE) hawkish shift, raising interest rates for the first time in more than three years and signaling that a further increase is likely unless the US-Iran war is resolved. Moreover, Chancellor John Healey's 2026 Autumn Budget reduced immediate risks of a runaway fiscal crisis, which could further help limit losses for the GBP. This, in turn, could lend some support to the GBP/JPY cross, warranting caution for aggressive bearish traders and positioning for any further depreciation move.