GBP/JPY gains traction above 191.00 amid softer Japanese Yen

• GBP/JPY drifts higher to 191.20 in Tuesday’s early Asian session, up 0.40% on the day. 
• The improved risk sentiment weighs on the safe-haven currency like the JPY. 
• The BoE is expected to keep the rate steady at 5.0% at its September meeting.

The GBP/JPY cross recovers to near 191.20, snapping the two-day, losing streak during the early European session on Tuesday. The sell-off of the Japanese Yen (JPY) broadly provides some support to the cross. Japan’s National Consumer Price Index (CPI) will be the highlight on Friday.

The Bank of Japan (BoJ) forecasted that a robust economic recovery in the Japanese economy would help inflation achieve its 2%  target sustainably. This would convince the BoJ to hike more rates after last month's move as part of the BoJ's continued attempt to unwind years of substantial monetary stimulus, according to Reuters. This, in turn, might boost the JPY and create a headwind for the cross.

On the other hand, the risk-on mood and easing geopolitical risks in the Middle East could undermine the safe-haven currency like the JPY. The United States said that Israeli Prime Minister Benjamin Netanyahu has accepted a bridging proposal aimed at resolving differences between Israel and Hamas. Nonetheless, any signs of escalating political tensions might boost the safe-haven flows, benefiting the JPY. 

The rising speculation that the Bank of England (BoE) would keep the interest rate steady at 5.0% at the upcoming September meeting could support the Pound Sterling (GBP) as well. “The BOE is most likely to leave rates unchanged at their next meeting in September with the next cut having to wait until November,” said Rupert Thompson, IBOSS chief economist.