GBP/JPY approaches 200.00 ahead of UK Budget, BoJ policy meeting

• GBP/JPY strives to visit 200.00 ahead of key events in the United Kingdom and Japan.
• The BoJ is expected to keep interest rates steady at 0.25%.
• Investors await the UK budget to project Pound Sterling’s next move.

The GBP/JPY pair aims to extend its upside towards the psychological resistance of 200.00 in Tuesday’s European session. The cross has shown a strong rally for over six weeks as the Japanese Yen (BoJ) remains weak due to diminishing expectations that the Bank of Japan (BoJ) will hike interest rates again this year.

The BoJ has already raised its key borrowing rates by 35 basis points (bps) to 0.25% this year as inflationary pressures remain above 2% for a longer period. The central bank appears to be incapable of hiking them further amid growing doubts over sustainable economic growth. Market participants worry that the absence of a majority government in national elections could impact the growth prospects of the economy.

This week, investors will focus on the BoJ policy meeting, which is scheduled for Thursday. The BoJ is expected to leave interest rates unchanged at 0.25%. Investors will pay close attention to fresh guidance on interest rates.

Due to weakness in the Yen across the forex domain, Japan's Finance Minister Katsunobu Kato vowed to be vigilant to FX moves. "We will continue to closely monitor foreign exchange moves, including those driven by speculators, with a higher sense of vigilance," Kato said, Reuters reported.

Meanwhile, the Pound Sterling (GBP) will be influenced by the United Kingdom (UK) Autumn Forecast Statement announcement on Wednesday. The Labour Party is expected to raise taxes with a focus on increasing public spending. The UK Chancellor of the Exchequer is expected to provide strong funding for housing affordability and the National Health Service (NHS).