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.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.