On the final trading day of the week, the GBP/JPY pair is attracting buying interest. It appears to have halted this week's pullback from the round 215.00 level—the February high and also the highest level since July 2008.

While investors assess the outcome of the Bank of England's monetary policy decision from Thursday, the British pound is being supported by partial selling of the U.S. dollar, which has become a key factor behind the rise in GBP/JPY. However, the Bank of England's dovish outlook may restrain pound bulls from taking decisive action and limit the pair's upside amid strengthening of the Japanese yen.

The Bank of England hinted at a possible rate cut in the future if inflation continues to slow, after the Monetary Policy Committee (MPC) decided to leave rates unchanged at its February meeting with a 5–4 vote. Bank of England Governor Andrew Bailey told reporters at the post-meeting press conference that inflation would return to target sooner than expected. Traders are now pricing in a 50-basis-point rate cut by the Bank of England this year.

This contrasts with growing expectations that the Bank of Japan will continue policy normalization. December data revealed a sharp drop in consumer spending in Japan, highlighting demand slowdown due to rising prices and reinforcing forecasts of a Bank of Japan rate hike. This creates moderate pressure on the yen and could slow the advance of GBP/JPY.

In addition, the likelihood of joint intervention by Japan and the United States is providing further support to the Far Eastern currency. However, concerns over Japan's fiscal situation and political uncertainty ahead of the snap lower-house election on February 8 could limit yen appreciation.

Overall, GBP/JPY is showing a modest weekly gain, but the mixed fundamental backdrop requires caution from aggressive bullish traders. The table below shows the percentage change of the Japanese yen against major currencies today. The yen has been strongest against the Canadian dollar. From a technical perspective, the pair is trading above all moving averages, heading toward the nearest target at the round 214.00 level. Oscillators on the daily chart are positive, confirming a bullish outlook.