GBP/JPY pops up above 213.00 even as UK local elections point to Labour party losses

The Pound Sterling (GBP) is one of the strongest performers on Friday, showing moderate gains against the Japanese Yen (JPY). The GBP/JPY pair returns above 213.00 at the time of writing, and is on track to end the week near opening levels. The Sterling has managed to pare losses from an alleged intervention from Japanese authorities on Wednesday as traders await the results of Thursday’s UK local elections.

The GBP manages to shrug off the first results from polls in the UK, which so far point to a significant reversal for the Labour Party. Prime Minister Keir Starmer’s ruling party has lost control of eight councils amid the emergence of Nigel Farage’s Reform UK, which, according to partial scrutiny, has taken more than 350 seats in local councils.

Starmer said earlier on Friday that he takes responsibility for a highly likely reversal, but assured that he is not thinking of resigning: "I am not going to walk away and plunge the country into chaos,” he said after the first results of the voting were published.

Traders, on the other hand, are likely to be wary of holding large Japanese Yen shorts as risks of further interventions from Japanese authorities remain alive. Japanese top currency diplomat, Atsushi Mimura, warned on Thursday that Tokyo has no constraints on how often it can intervene to support the Yen and affirmed that he is in daily contact with US authorities, suggesting the possibility of coordinated action to stem speculative JPY selling.