Sterling rose in European trade on Monday for a second session against yen, almost touching eight-year peak on concerns about a widening policy gap between the UK and Japan.
Sterling spiked in June after Bank of England surprised the markets with a 0.5% rate hike, passing expectations of a 0.25% rate hike.
Otherwise, Bank of Japan has maintained its ultra easy monetary policies to support the world's third largest economy.
GBP/JPY rose 0.45% to 183.75, with a session-low at 182.92, after rising 0.4% on Friday, the first profit in three days, marking eight-year highs at 183.87.
Sterling spiked 5.7% against yen in June, the sixth monthly profit in a row, and the longest such streak of monthly gains since 2012.
Interest Rate Gap
The gap of interest rates between Japan and the UK stands at over 500 basis points and on its way to get bigger as BoE continues to tighten policies and raise interest rates.
Bank of England
Bank of England shocked the markets with a 0.5% rate hike last month to 5%, the highest since 2008.
Such an aggressive step is taken to bring inflation back from its 15-year peak.
Bank of England asserted it continues to monitor consumer prices and the labor conditions, adding that it's prepared to more policy tightening if inflation proved stubborn.
Bank of England Governor Andrew Bailey said recently that interest rates could get even higher in the UK to control prices, potentially around 6%.
BoJ
Conversely, Bank of Japan voted to hold policies unchanged in June as expected, with interest rates held at minus 0.1%.
BoJ decided to maintain the 10-year government bond yield target unchanged at zero percent.
BoJ said it's appropriate to hold interest rates unchanged to support growth and recovery.