GBP/JPY soars near 168.00 on BOJ’s dovish guidance, Truss topples buzz

• GBP/JPY has refreshed its four-month high at around 168.00 amid BOJ’s dovish guidance.
• Monday’s depreciation in yen has accelerated the odds of BOJ’s intervention in currency market.
• Fears of Liz Truss’s topple have turned the pound bulls highly volatile.

The GBP/JPY pair has refreshed its four-month high near 168.00 as the risk-off impulse has surrendered globally. The cross has built its intraday gains on the base of dovish guidance by the Bank of Japan (BOJ). The ongoing upside momentum is expected to continue and the pair will re-test a six-year high at 168.53.

On Friday, BOJ’s Governor Haruhiko Kuroda that “It is appropriate to continue monetary easing,” reported Reuters. The central bank sees inflationary pressures declining to 2%, therefore, a continuation of dovish monetary policy is highly required.

Meanwhile, the overall weakening of the Japanese yen has triggered the odds of BOJ’s intervention in the currency markets. Last week, Japanese Chief Cabinet Secretary Hirokazu Matsuno cited that “We are closely watching FX moves with a high sense of emergency and will take appropriate steps on excess FX moves.

On the UK front, fears of UK novel Prime Minister Liz Truss’s topple have turned the pound bulls extremely volatile. The Old Lady has failed to gain the confidence of international investors amid the absence of confidence in her drafted policies. Back-and-forth rollbacks of monetary easing have trimmed her credibility.

Apart from that, mounting price pressures in the UK economy are a major concern for the Bank of England (BOE) policymakers. In response to taming inflationary pressures, BOE Governor Andrew Bailey stated that “We will not hesitate to raise interest rates to meet the inflation target," The central bank believes that price pressures demand stronger policy tightening measures than announced in August.