USD/JPY and various cross yen pairs were again disturbed by the issues surrounding the change of leadership of the central bank of Japan (BoJ). USD/JPY, GBP/JPY, and EUR/JPY each plunged by 1 percent.

That could be seen in Asian session trading until the start of Friday's European session (10/February). Haruhiko Kuroda has served as BoJ Governor since March 20, 2013.

He will end it on April 8, 2023. Kuroda implemented an ultra-loose monetary policy throughout his tenure, marked by the implementation of negative interest rates and the controversial yield curve control (YCC) policy. 

Market participants hope that Japan's ultra-loose monetary policy will come to an end along with Kuroda's ouster. Those expectations have been controlling the yen exchange rate and putting pressure on the USD/JPY since the end of last year. 

USD/JPY Surged This Week

However, that expectation can only be realized if the next BoJ leadership has a more hawkish view. USD/JPY briefly surged earlier this week.

That was especially after the Nikkei reported that Japan would appoint Deputy Governor Masayoshi Amamiya to replace Kuroda. The reason is, Amamiya is famous as a figure who is as dovish as Kuroda.

The rumors were later dismissed by government officials. However, concerns over the BoJ's dovish potential continued to loom until today's update circulated. 

The Nikkei Asian Review this morning reported that the Japanese government will appoint a former BoJ Policy Council member, Kazuo Ueda, to replace Kuroda. 

Amamiya will not Replace Kuroda 

The leading business media also revealed that the Japanese government had originally intended to appoint Amamiya to replace Kuroda. However, Amamiya rejected the offer. 

Market participants spontaneously bought the yen because they were relieved at the non-appointment of Amamiya as a replacement for Kuroda. But analysts say Ueda's policy bias is not yet known. 

Observers had not previously considered Ueda a strong candidate to replace Kuroda. The market reacts to the fact that the new Governor (BoJ) is not Amamiya who is a well-known dovish figure.

Observers suspect that the BoJ's going forward where in this case is under Ueda will not be much different. This was said by jane Foley, a Rabobank's fx chief strategist.

Ueda and Kuroda has the Different Type 

Ueda seems to be a very different type to Kuroda, in terms of his figure as an academic who will obviously carry out policies based on actual economic fundamentals and value discussions with the market.

That opinion was stated by Hiroaki Muto, an economist at Sumitomo Life Insurance Co. He also added that Ueda is also not necessarily hawkish.

The pound sterling rallied yesterday which was caused by the depreciation of the US dollar and hawkish statements by officials of the British central bank (BoE). However, momentum weakened in Friday's trading (10/February). 

The GBP/USD was constrained in the 1.2120s after the release of UK Gross Domestic Product (GDP) data at the beginning of the European session. Meanwhile, GBP/JPY fell by up to one percent.

UK Economy did not Grow At All

The UK GDP report showed growth of -0.5% for month over month in December 2022. The figure signals a continued decline from the record -0.1% in the previous period.

This level also worse than the consensus estimate pegged at -0.3% alone. The UK economy as a whole did not grow at all, or 0% for Quarter-over-Quarter period, in the fourth quarter of 2022. 

As such, the UK performed slightly better than the BoE's previous predictions and "only" came close to a recession at the end of last year. Some analysts think the this country is likely to avoid a recession this year. 

The economic outlook remains quite challenging. That was although the cold hit in December, due to bad weather, strikes and sharper price increases, the economic slowdown was not deep enough to push the UK into recession.