|

GBP/JPY Price Forecast: Momentum stabilizes, but lacks bullish conviction

  • GBP/JPY trades on the front foot as the Japanese Yen extends its post-BoJ decline.
  • Technically, GBP/JPY remains below all major daily SMAs, keeping the near-term bias bearish.
  • The MACD improves slightly near the zero line, suggesting tentative stabilization.

GBP/JPY edges higher on Monday as the Japanese Yen (JPY) remains under pressure across the board in thin trading conditions. Japanese markets are closed until Wednesday for the country’s Silver Week holidays. At the time of writing, the cross trades around 210.55, extending gains for a second straight day.

Japanese Yen Price Today

The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Canadian Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD-0.07%0.00%0.20%0.10%-0.19%-0.22%-0.13%
EUR0.07%0.00%0.23%0.13%-0.16%-0.23%-0.11%
GBP-0.00%-0.01%0.21%0.10%-0.17%-0.25%-0.11%
JPY-0.20%-0.23%-0.21%-0.10%-0.43%-0.41%-0.29%
CAD-0.10%-0.13%-0.10%0.10%-0.32%-0.32%-0.20%
AUD0.19%0.16%0.17%0.43%0.32%-0.02%0.09%
NZD0.22%0.23%0.25%0.41%0.32%0.02%0.11%
CHF0.13%0.11%0.11%0.29%0.20%-0.09%-0.11%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).

The Yen fell sharply on Friday after the Bank of Japan (BoJ) raised its policy rate by 25 basis points (bps) to 1.25%. Traders viewed the decision as dovish because two policymakers voted against the increase, while Governor Kazuo Ueda offered limited guidance on the timing of the next move.

The Bank of England’s (BoE) decision to keep interest rates unchanged at 3.75% last week also weighed on the British Pound (GBP). However, persistent Yen weakness is overshadowing the pressure on Sterling and keeping GBP/JPY supported.

A wide interest-rate gap and elevated Oil prices amid war in the Middle East continue to weigh on the Yen. The Yen’s decline has also brought intervention risk back into focus. Reports that BoJ conducted a rate check during Friday’s American trading hours added to speculation that officials could step again into the foreign exchange market if the currency weakens rapidly.

Looking ahead, the economic calendar is relatively light this week. Preliminary Purchasing Managers' Index (PMI) data from the United Kingdom (UK) and Japan will be closely watched for fresh signs of economic activity. Traders will also watch speeches from BoE officials for more clues about the interest-rate outlook.

Technical Analysis

On the daily chart, GBP/JPY keeps a bearish near-term tone as spot holds beneath the 50-, 100- and 200-day Simple Moving Averages (SMAs) clustered between roughly 213.00 and 214.50. The pair is hovering just under the 38.2% Fibonacci retracement at 210.65, underscoring a capped recovery, while the Relative Strength Index around 44 hints at subdued demand despite a slightly positive Moving Average Convergence Divergence (MACD) reading near the zero line, which only suggests tentative stabilization rather than a clear bullish reversal.

On the topside, initial resistance appears at the 38.2% retracement at 210.65, followed by the 50.0% level at 211.76 and the 61.8% retracement at 212.87, before a denser barrier formed by the 200-day SMA at 213 and the 50- and 100-day SMAs around 214.30-214.35, with the 78.6% retracement at 214.46 and the prior swing high zone near 216.47 acting as higher caps.

On the downside, the 23.6% Fibonacci retracement at 209.27 offers initial support, ahead of the structural floor around 207.05, where the lower Fibonacci anchor aligns with the recent cycle low.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Bank of Japan FAQs

The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.

The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.

The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.

A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.

Author

Vishal Chaturvedi

I am a macro-focused research analyst with over four years of experience covering forex and commodities market. I enjoy breaking down complex economic trends and turning them into clear, actionable insights that help traders stay ahead of the curve.

More from Vishal Chaturvedi
Share:

Editor's Picks

AUD/USD sticks to neutral bias above 0.7100 amid cautious markets

AUD/USD holds steady above 0.7100 in the Asian session on Monday as the US Dollar stalls its modest pullback from the highest level since late July amid persistent geopolitical uncertainties. The PBOC status quo on Loan Prime Rates also weighs on the Aussie. However, bets on another RBA rate hike continue to underpin the Australian Dollar ahead of the Trump-Xi Summit.

USD/JPY eases below 157.00 amid looming intervention risks

USD/JPY is easing back below 157.00 in Asia on Monday, undermined by modest Japanese Yen strength amid looming intervention risks after Friday's BoJ rate check. A Japanese holiday also keeps traders on edge amid escalating geopolitical tensions between Russia and Ukraine and in the Middle East. As a result, the US Dollar pauses its pullback, limiting the pair's downside.

Gold starts week on the back foot as US Dollar holds firm, Oil decline limits losses

Gold (XAU/USD) starts the week on a bearish note, snapping a two-day winning streak as expectations of additional Federal Reserve (Fed) rate hikes and a firmer US Dollar (USD) limit the upside.

Bitcoin hits $85,000 for the first time in eight months
Bitcoin price reclaims $85,000 on Monday, advancing last week’s 5% recovery toward an eight-month high. The recovery in King Crypto aligns with renewed institutional demand, with Exchange Traded Funds (ETFs) recording $433 million in inflows on Friday.
The week ahead: Fuel prices in focus as we lead up to key eco releases

Financial markets are in a strange position as we move to the final weeks of Q3, uncertainty and volatility continue to grip markets, but the oil price is falling; and European and US stocks are poised to open higher later on Monday. Market stresses are concentrated in sovereign bonds, and European and US yields had another scare late on Friday, and moved higher.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.