GBP/JPY attracts some buyers above 198.50 as Japan's election outcome casts doubt on BoJ's rate hike plans

The GBP/JPY cross gains momentum to around 198.75 during the early European session on Monday.

GBP/JPY strengthens to near 198.75 in Monday’s early European session, adding 0.70% on the day. Political uncertainty in Japanexerts some selling pressure on the JPY. The hawkish comments from the BoE policymaker underpin the Pound Sterling. The Japanese Yen edges lower amid political uncertaintyafter Japan’s ruling Liberal Democratic Party lost its majority at Sunday's national election.

Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors. How do the decisions of the Bank of Japan impact the Japanese Yen? One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen.

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