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The GBP/JPY pair trades 0.22% higher to near 213.10 at the start of the European trading session on Thursday. The pair gains as the Japanese Yen (JPY) underperforms across the board ahead of the monetary policy announcement by the Bank of Japan (BoJ) on Friday.

Japanese Yen Price Today
 

The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the weakest against the Australian Dollar.
 

Investors expect the BoJ to hold interest rates steady at 0.75%, and leave the door open for interest rate hikes this year. Market participants will also focus on the BoJ’s Q4 Outlook report to get fresh cues about the current state of the economy.

On the fiscal front, Japan’s Prime Minister (PM) Sanae Takaichi is prepared to dissolve the parliament’s lower house on January 23. Takaichi called an early snap election to get more seats, increasing her odds to pass fiscal budget for the year. Takaichi has also announced removing the consumption tax to boost household spending, a scenario that could prompt inflationary pressures.

Meanwhile, the Pound Sterling (GBP) trades with caution even as faster-than-projected growth in the United Kingdom (UK) inflation in December has raised concerns over expectations of interest rate cuts by the Bank of England (BoE) in the near term. The data showed on Wednesday that the UK headline Consumer Price Index (CPI) rose at an annualized pace of 3.4%, faster than 3.3% estimates and the November reading of 3.2%.

Going forward, investors will focus on the UK Retail Sales data for December and the preliminary S&P Global Purchasing Managers’ Index (PMI) data for January, scheduled for Friday.

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