GBP/JPY draws some buyers above 193.00, focus shifts to Tokyo CPI data

• GBP/JPY rose to around 193.10 in the first European session on Thursday.
• Uncertainty about the BoJ’s interest rate path is undermining the JPY.
• The BoE’s Greene said he preferred a cautious approach to cutting interest rates.

GBP/JPY cross extends rally to near 193.10 during Thursday’s European session. The prospect of the Bank of Japan (BoJ) delaying an interest rate hike this year is weighing on the Japanese yen (JPY). Traders will be keeping an eye on Japan’s Tokyo Consumer Price Index (CPI) for September due on Friday.

JPY loses momentum after BoJ Governor Kazuo Ueda signaled that the Japanese central bank is in no rush to raise interest rates. According to minutes of the BoJ meeting published on Thursday, policymakers were divided on how quickly the central bank should raise interest rates further, citing uncertainty over when the next increase in borrowing costs would occur. Several board members noted that it would be “appropriate” for the central bank to “begin gradually adjusting the significantly low policy interest rate.”

On the other hand, growing speculation that the Bank of England’s (BoE) rate cut cycle is more likely to be slower than previously expected is providing some support for the British pound (GBP). BoE Governor Andrew Bailey said he was “very encouraged” by the downward trajectory of inflation and expected the trajectory of interest rates to be gradually downward. Meanwhile, BoE policymakers Megan Greene said on Wednesday she preferred a “cautious approach” to cutting interest rates, warning of risks from strong wage growth and economic activity.