Sterling Falters Against Yen Amid Tariff Fears and UK Political Strife

The British Pound (GBP) weakened against the Japanese Yen (JPY), with GBP/JPY slipping below 197.61, retreating from the 198.00 level. Rising safe-haven demand ahead of the July 9 U.S. tariff deadline and UK political tensions have curbed Sterling’s strength. With U.S. markets closed for Independence Day, the Yen’s gains reflect trade uncertainties and Japan’s loose monetary policy, highlighting the need for policy clarity to stabilize currency markets.

The GBP/JPY decline is driven by U.S. tariff threats of 10% to 70%, which could disrupt Japan’s tech and auto exports, boosting JPY as a safe-haven. The International Monetary Fund warns tariffs may cut global GDP by 0.5%, supporting Yen demand. In the UK, Labour Party disputes over budget cuts and unclear tax plans weaken GBP, with technical support at 197.00 under pressure. Japan’s ultra-loose monetary policy caps JPY gains, but GBP/JPY remains above its 200-day moving average at 193.55, with a potential drop to 195.41 if support breaks.

UK policymakers must clarify fiscal plans to bolster GBP, while U.S. and Japanese officials should negotiate trade terms to ease tariff risks. Investors should watch the July 9 deadline and UK budget updates. Without coordinated action, GBP/JPY risks falling to 195.41 by late July, threatening currency stability.