GBP/JPY drives to near 161.50 as BOE considers prolonged bond-buying program

• GBP/JPY has recorded an intraday high of around 161.50 after BOE considered a prolonged bond-buying program.
• Japanese officials could make a surprise intervention in the currency markets.
• In today’s session, the release of the UK heavy economic activities data will remain in focus.

The GBP/JPY pair displayed a perpendicular move to near 161.50 after reports came that the Bank of England (BOE) is considering a prolonged bond-buying program to fight against sheer volatility in the market. The vertical upside move has corrected to near 160.70, however, the upside seems favored.

As reported by Financial Times, the BOE has signaled privately to bankers that it may extend bond buying to stabilize the financial system. Earlier, BOE Governor Andrew Bailey announced that the central bank will terminate its support to the market. And, institutions and pension funds have three days left to purchase index-linked gilts up to GBP5 bln. Following the positive cues from the cable, the GBP/JPY is expected to advance further.

In the European session, the UK data on Industrial and Manufacturing production will be of utmost importance. The economic catalysts are expected to display a vulnerable performance amid bleak economic fundamentals and poor demand due to soaring inflation and interest rates.

On the Tokyo front, Japanese Chief Cabinet Secretary Hirokazu Matsuno denied on commenting over day to day movement in the FX domain but cited that “We are closely watching to FX moves with a high sense of emergency and will take appropriate steps on excess FX moves. The commentary came after the USD/JPY pair refreshed its multi-year high at around 146.40.