GBP/JPY Price Forecast: Next upside barrier emerges near 193.50

GBP/JPY gains ground to around 191.20 in Wednesday’s early European session.
The cross keeps the negative outlook below the 100-period EMA with the bearish RSI indicator.
The initial support level is seen at 187.70; the key upside barrier to watch is 193.50.

Lallalit Srijandorn FXStreet

The GBP/JPY cross trades in positive territory near 191.20 during the early European session on Wednesday. The Japanese Yen (JPY) weakens amid the concern that US President Donald Trump's no-exemption taxes on commodity imports could jeopardize Japan's economic recovery.

Early Wednesday, Japan's Finance Minister, Katsunobu Kato, noted that he will assess the impact of US tariffs on the Japanese economy and respond appropriately.

Technically, the bearish outlook of GBP/JPY remains in place as the cross remains capped below the key 100-day Exponential Moving Average (EMA) on the daily chart. Furthermore, the downward momentum is supported by the Relative Strength Index (RSI), which is located below the midline near 47.45, suggesting that the path of least resistance is to the downside.

The lower limit of the Bollinger Band at 187.70 acts as an initial support level for the cross. A decisive break below the mentioned level could expose the 187.05-187.00 region, representing the low of February 7 and the psychological mark. Further south, the next contention level is seen at 184.37, the low of September 13, 2024.

On the bright side, the key resistance level for GBP/JPY emerges near 193.50, the 100-day EMA. Sustained trading above this level could pave the way to 195.15, the upper boundary of the Bollinger Band. The additional upside filter to watch is 197.41, the high of January 6.

GBP/JPY daily chart

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

Lallalit Srijandorn

FXStreet

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

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