GBP/JPY falls to near 189.00 following the BoJ interest rates decision – FXStreet

• GBP/JPY lost its upward momentum after the Bank of Japan's interest rate decision was announced.
• The Bank of Japan decided at its meeting on Friday to keep current interest rates unchanged at 0.15%.
• Policymakers are awaiting UK retail sales data for August to gain further insight into how the UK economy is performing.

GBP/JPY ended a four-day winning streak and traded near the 189.00 mark in Friday's Asian session. The GBP/JPY cross is facing difficulties as the Japanese Yen (JPY) strengthened following Friday's Bank of Japan (BoJ) policy decision to keep interest rates unchanged at 0.15% as expected.

Moreover, Japan's Consumer Price Index (CPI) rose to 3.0% year-on-year in August, up from 2.8% the previous month and the highest level since October 2023. Also, the core national CPI, excluding fresh food, rose to a six-month high of 2.8%, marking the fourth consecutive month of increases and in line with market expectations.

“We will continue to closely monitor and analyze the impact of the latest U.S. interest rate cut on the Japanese economy and financial markets,” Japanese Finance Minister Shunichi Suzuki said on Friday. Suzuki added that the Federal Reserve's view of the U.S. economy is consistent with the Japanese government's view that the U.S. economy is likely to expand.

In the UK, the Bank of England (BoE) decided on Thursday to keep interest rates unchanged at 5%, as was widely expected. The BoE cut interest rates by 0.25 percentage point at its last meeting and had signalled a possible rate cut earlier in the summer, but this move may have been premature.

Policymakers are waiting to see further developments in the UK economy before considering further rate adjustments. On Friday, UK retail sales data for August will be closely watched. It is expected to fall to 0.4% from 0.5% on a monthly basis, but remain stable at 1.4% on an annualized basis.

Among the nine members of the Monetary Policy Committee (MPC), Swati Dhingra, an external member of the Bank of England, voted in favour of a second consecutive rate cut, while the rest of the committee supported maintaining interest rates at their current levels. Investors had expected the two MPC members to favour a dovish policy decision.