Rate differentials · BoE vs BoJ · priced as of 12 November 2026
GBP/JPY interest rate differential: BoE vs BoJ
As of 12 November 2026, the GBP/JPY interest rate differential is +275 bp: the BoE's Bank Rate at 4.00% against the BoJ's policy rate at 1.25%, in favour of the pound. Markets price the gap at +289 bp in six months and +286 bp in twelve.
Over the next six months, markets price the gap to move +14 bp over six months, towards the pound. That six-month gap has moved +12 bp in a month.
The rate spread, now and priced ahead
| BoE (GBP) | BoJ (JPY) | Gap | |
|---|---|---|---|
| Policy rate now | 4.00% | 1.25% | +275 bp |
| Priced in 6 months | 4.60% | 1.71% | +289 bp |
| Priced in 12 months | 4.77% | 1.91% | +286 bp |
| 6-month gap a month ago | 4.43% | 1.66% | +277 bp |
The gap is GBP minus JPY, in basis points (100 bp is one percentage point). Six and twelve months out is the rate implied after each bank's last meeting on or before that date. Market pricing, not a forecast. Each bank's meeting-by-meeting odds: BoE · BoJ.
The carry on GBP/JPY
The pound: the Bank of England pays 4.00% against 1.25%, a gap of +275 bp. Holding the higher-yielding currency against the lower earns roughly that gap a year before costs, which is what the carry trade collects; a move in the exchange rate can outweigh it.
How the gap feeds the exchange rate, and when it does not: rate differentials explained and the carry trade explained.
Questions
What is the GBP/JPY interest rate differential?
As of 12 November 2026, the GBP/JPY interest rate differential is +275 bp: the BoE's Bank Rate at 4.00% against the BoJ's policy rate at 1.25%, in favour of the pound. Markets price the gap at +289 bp in six months and +286 bp in twelve.
Is the BoE–BoJ gap priced to widen or narrow?
Markets price the gap to move +14 bp over six months, towards the pound, from +275 bp now to +289 bp. A month ago (13 October) the same six-month gap was priced at +277 bp, so it has moved +12 bp since. That is market pricing, not a forecast.
Which side of GBP/JPY has the carry?
The pound: the Bank of England pays 4.00% against 1.25%, a gap of +275 bp. Holding the higher-yielding currency against the lower earns roughly that gap a year before costs, which is what the carry trade collects; a move in the exchange rate can outweigh it.
Where does this pricing come from?
Each bank's priced path comes from the market instrument behind it: Exchange-traded futures, WatchTower model for BoE, Exchange-traded futures, WatchTower model for BoJ. The rate six or twelve months out is the one implied after the last meeting on or before that date. The month-ago figure is from our daily snapshot of the same curves.
More on GBP/JPY: GBP/JPY analysis · GBP/JPY retail sentiment · GBP/JPY seasonality · British Pound outlook · British Pound COT positioning · BoE rate expectations · UK economic surprises · Japanese Yen outlook · Japanese Yen COT positioning · BoJ rate expectations · Japanese economic surprises
Other rate differentials: GBP/USD 0 bp · USD/JPY +275 bp · EUR/GBP −150 bp · EUR/JPY +125 bp · GBP/CHF +400 bp · GBP/AUD −85 bp · GBP/CAD +150 bp · GBP/NZD +125 bp · AUD/JPY +360 bp · NZD/JPY +150 bp · all 28
In WatchTower Terminal, the Rate spread panel draws the GBP/JPY gap against the price. Nothing here is financial advice.