GBP/JPY Price Forecast: Refreshes two-week high near 204.00, BoJ’s policy outcome awaited

GBP/JPY jumps to near 204.00, the highest level seen in two weeks.
The Japanese government might issue fresh bonds to fund extra fiscal spending.
Upbeat UK Retail Sales and flash S&P Global PMI support the Pound Sterling.

Sagar Dua FXStreet

The GBP/JPY pair posts a fresh two-week high near 204.00 on Monday, and trades 0.25% higher during the early European session. The pair strengthens as the Japanese Yen (JPY) underperforms its peers as newly elected Japanese Prime Minister Sanae Takaichi commits to boosting defense spending and is expected to announce higher fiscal plans in its upcoming budget.

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Australian Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.03%	-0.10%	0.15%	-0.11%	-0.41%	-0.24%	0.08%
EUR	-0.03%		-0.09%	0.14%	-0.12%	-0.39%	-0.26%	0.10%
GBP	0.10%	0.09%		0.24%	-0.02%	-0.29%	-0.17%	0.19%
JPY	-0.15%	-0.14%	-0.24%		-0.27%	-0.58%	-0.39%	-0.07%
CAD	0.11%	0.12%	0.02%	0.27%		-0.29%	-0.13%	0.22%
AUD	0.41%	0.39%	0.29%	0.58%	0.29%		0.13%	0.49%
NZD	0.24%	0.26%	0.17%	0.39%	0.13%	-0.13%		0.34%
CHF	-0.08%	-0.10%	-0.19%	0.07%	-0.22%	-0.49%	-0.34%

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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

According to a report from BBH, Tokyo is also expected to issue more bonds to fund its upcoming extra budget. Takaichi’s expansionary fiscal policies undermine the appeal of the Japanese Yen (JPY).

This week, the major trigger for the Japanese currency will be the Bank of Japan’s (BoJ) monetary policy announcement on Thursday, in which it is expected to hold interest rates steady at 0.5%.

Meanwhile, the Pound Sterling (GBP) trades higher against its peers, except antipodeans, due to strong United Kingdom (UK) Retail Sales data for September and upbeat preliminary S&P Global PMI data for October released on Friday.

GBP/JPY extends its recovery move to near 204.00, which came after testing the breakout zone plotted in a range between 199.80-201.15. The 20-day Exponential Moving Average (EMA) acted as support near 201.50, which currently trades around 202.30.

The 14-day Relative Strength Index (RSI) returns above 60.00, indicating a strong upside momentum ahead.

Going forward, the pair could revisit its 15-month high of 205.33 posted on October 8 after breaking above, if it manages to stabilize above 204.00. The pair might rise further towards the 11 July 2024 high of 208.11 if it breaks above 205.33.

On the flip side, a downside move by the pair below the October 1 low of 200.68 would expose it to the October 3 high of 198.87, followed by the October 2 low around 197.50.

GBP/JPY daily chart

Economic Indicator

BoJ Interest Rate Decision

The Bank of Japan (BoJ) announces its interest rate decision after each of the Bank’s eight scheduled annual meetings. Generally, if the BoJ is hawkish about the inflationary outlook of the economy and raises interest rates it is bullish for the Japanese Yen (JPY). Likewise, if the BoJ has a dovish view on the Japanese economy and keeps interest rates unchanged, or cuts them, it is usually bearish for JPY.

AUD/USD keeps range near mid-0.7100s as USD bulls await US CPI

AUD/USD steadies near mid-0.7100s in the Asian session on Friday, stalling the previous day's sharp decline to an over one-week low. The August PPI report reaffirmed Fed rate-hike bets and boosted the US Dollar on Thursday, which weighed heavily on the pair. However, hawkish RBA expectations limited losses for the Aussie as USD bulls now await the release of the US consumer inflation figures before placing fresh bets.

USD/JPY holds lower ground toward 154.00; looks to US CPI

USD/JPY holds lower ground toward 154.00 in the Asian session on Friday after hot Japanese PPI data bolster a more hawkish BoJ repricing and provide fresh impetus to the Japanese Yen. However, the downside appears capped as the US Dollar preserves overnight gains ahead of the latest US consumer inflation data.

Gold: Gains remain capped by $4,400

Gold regains composure and trades with decent gains on Friday, managing to refocus attention on the $4,440 mark per ounce troy. Therefore, the precious metal reverses Thursday’s decline as the US Dollar alternates gains with losses at the end of the week.

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