Sterling rises to six-month high against the yen

·1-min read
Illustration shows British pound banknote placed on U.S. Dollar banknotes

By Tom Wilson

LONDON (Reuters) - Sterling on Friday climbed against the yen to its highest in almost six months after the Bank of Japan left its ultra-easy monetary policy unchanged, sparking a broad-based drop in the Japanese currency.

The yen fell against major currencies from the dollar to the euro after the BOJ decision, even as it scrapped a pledge to keep interest rates low.

Sterling rose 1.2% against the yen to as high as 169.47, its highest since early November 2022.

"If you don't get catalyst for yen appreciation, you get moves like you are seeing in sterling-yen," said Stephen Gallo, global currency strategist at BMO Capital Markets. "It's more of a yen story."

The pound fell 0.2% versus the dollar, meanwhile. Against a basket of currencies, the dollar was up 0.5%, but still was on track for a second straight monthly loss.

Sterling rose 0.1% against the euro.

Interest rate hikes in Europe just as U.S. rates near a peak have been supporting the pound and euro of late. Sterling hit a 10-month high of $1.2545 on 14 April.

"Pressure does look to be building for a move higher later in the year, however," ING analysts wrote.

However, Britain was the only country in western Europe in March with double-digit inflation. Some market players see further pain ahead for the British economy unless the Bank of England brings inflation down and growth picks up.

The BoE's next rate setting meeting is on May 11.

(Reporting by Tom Wilson; Editing by Peter Graff)