GBP/JPY shifts auction above 164.00, sees more upside on risk-on profile

• GBP/JPY has established above 164.00 comfortably on soaring market mood.
• Escalating Japan-North Korea tensions after frequent missile launches from Kin Jong-un have impacted yen.
• Fitch Ratings have affirmed a AA- rating to BOE sovereign, outlook revised to Negative from Stable.

The GBP/JPY pair is displaying back-and-forth moves in a narrow range of 164.03-164.46 range in the early European session. The asset has turned sideways after overstepping the intermediate hurdle of 164.00 and is expected to resume its upside journey amid a cheerful market mood. An improvement in risk appetite has increased demand for risk-sensitive currencies. Following positive cues from the GBP/USD, the cross is aiming to record more upside ahead.

Escalating geopolitical tensions between Japan and North Korea has weakened the yen bulls. Frequent missile launches from the Kin Jong-un region over Japan territory having unavailability of prior notice of testing technical improvements of weapons is been considered as message narrating international tensions.

Meanwhile, Japanese Deputy Chief Cabinet Secretary Seiji Kihara has condemned the missile launch activity by North Korea, as reported by Reuters. He further added that "North Korea may increase provocative operations, including nuclear tests."

Commentary from the White House claims that North Korean missile launches pose no immediate danger to allies, which has kept the risk-on mood in a sweet spot.

On the UK front, the rollback of tax cuts to support households from the headwinds of price pressures and soaring energy bills are keeping the pound bulls in the driving seat. The rumor of cable meeting parity has been puzzled further as a Reuters poll on the expectation of parity by the end of 2022 displays that analysts are divided on the fact.

Apart from that, Fitch Ratings have downgraded the Bank of England (BOE) Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) to Negative from Stable, affirming AA-. This could impact the pound rally ahead.