GBP/JPY Price Forecast: Bulls eye 217.00 as rally extends

GBP/JPY hits 14-day high after clearing last week’s peak.
RSI momentum improves, supporting a potential bullish continuation.
Losses below 216.00 could target 215.60 and 214.81.

Christian Borjon Valencia FXStreet

The GBP/JPY advanced over 0.72%, refreshing a 14-day high of 216.90, with buyers eyeing a breakout above 217.00, which could open the door to a retest of the yearly highs hit in mid-July. The pair trades at 216.73 after bouncing off the daily low of 215.04.

GBP/JPY Price Forecast: Technical Outlook

The technical picture seems more constructive, with GBP/JPY clearing the previous week's high of 216.22, opening the door to further upside. Momentum finally edged higher, as seen in the Relative Strength Index (RSI), which remained flatlined during the last two trading sessions.

Upwards, the first resistance is the 217.00 mark. A breach of the latter will expose the July 10 high of 218.69, ahead of the July 15 high at 219.61.

Conversely, if GBP/JPY slides below 216.00, this paves the way to test the 50-day Simple Moving Average (SMA) at 215.60. Below lies the 100-day SMA at 214.81, followed by the 200-day SMA at 212.51.

GBP/JPY Price Chart – Daily

Japanese Yen FAQs

What key factors drive the Japanese Yen?

The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.

How do the decisions of the Bank of Japan impact the Japanese Yen?

One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.

How does the differential between Japanese and US bond yields impact the Japanese Yen?

Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.

How does broader risk sentiment impact the Japanese Yen?

The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.

Author

Christian Borjon Valencia

FXStreet

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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