GBP/JPY extends rally to 2008 highs as elevated Oil prices weigh on the Yen

The GBP/JPY currency pair has reached levels not seen since 2008, driven by the recent surge in oil prices which has negatively impacted the Japanese yen. This movement reflects a shift in risk appetite, as higher oil prices typically lead to increased inflation expectations in Japan, prompting a depreciation of the yen against stronger currencies like the pound. The most exposed assets include GBP and JPY, with traders particularly focused on the implications for Japan's trade balance and monetary policy. Looking ahead, market participants will closely watch the upcoming Bank of Japan meeting for any signals regarding interest rate adjustments or interventions in response to the yen's weakness.

The British Pound (GBP) reacts sharply to Bank of England Monetary Policy Committee decisions, UK CPI and GDP releases, Gilt yield moves, and domestic political events. Cable (GBP/USD) is one of the most news-sensitive forex majors.

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