British Pound rises against Japanese Yen despite BoJ Ueda reiterates hawkish outlook

The British Pound (GBP) trades 0.4% higher at around 210.50 against the Japanese Yen (JPY) during the European trading session on Friday. The cross gains significantly as the Asia-Pacific currency underperforms even as Bank of Japan (BoJ) Governor Kazuo Ueda has delivered hawkish remarks on the monetary policy outlook.

Ueda flags ongoing rate hikes as inflation nears target, lifting Yen outlook

FXS Speechtracker scores this speech at 8.2, notably above Governor Ueda’s historic 7.3 average, signalling a stronger-than-usual policy signal. The emphasis on continuing to raise the policy rate, with underlying inflation approaching and potentially overshooting the 2% target, marks a clear hawkish tilt that supports a firmer Yen bias.

By stressing that stabilising inflation around 2% is now more important than in the past, while noting that financial conditions remain accommodative even after the September hike, the speech reinforces expectations of further gradual tightening. The data-dependent framing of future adjustments, tied to baseline projections and risks, underpins a controlled but persistent normalisation path that should keep upward pressure on Yen yields and support Yen on dips.

Earlier in the day, United States (US) Treasury Undersecretary for International ‌Affairs, Erin Browne, said on Friday that Japan is no longer faces deflationary environment, and the Japanese Yen (JPY) level and monetary policy must change along with that. Treasury Undersecretary for International ‌Affairs Browne added, “US-Japan communicate closely and work together at all levels to support stable, well-functioning markets.”

On the British Pound, the currency is expected to face high volatility next week as the United Kingdom (UK) labor market data for three months ending August and the Consumer Price Index (CPI) data for September are scheduled to be released on Tuesday and Wednesday, respectively.

The UK data is expected to have a significant impact of Bank of England’s (BoE) interest rate expectations.