GBP/JPY Price Forecast: Uptrend pauses, bulls eye 219 breakout

GBP/JPY extends third-day slide as bullish momentum fades.
RSI poised to recover, suggesting buyers retain upside control.
Break above 219.00 exposes 219.50 and 220.00 resistance.

Christian Borjon Valencia FXStreet

The Pound Sterling registers losses against the Japanese Yen for the third consecutive trading day, doon 0.15% as traders digest the first speech of new Prime Minister Andy Burnham, who is naming the first members of his cabinet. The GBP/JPY trades at 218.13 after reaching a daily high of 218.84.

GBP/JPY Price Forecast: Technical outlook

Last week, the GBP/JPY bounced off a daily low on July 15 and hit a new yearly high of 219.61, opening the door to a consolidation as bullish momentum faded.

The Relative Strength Index (RSI) shows that buyers remain in charge, as the index, after briefly dipping, is poised to resume its upward trajectory, an indication that further upside is in the cards.

For a bullish continuation, the GBP/JPY must reclaim 219.00. A breach of the latter exposes the 219.50 area, ahead of 220.00. On further strength, the next resistance would be the psychological 221.00.

Downwards, the first support is the July 9 high at 218.01. If sellers clear the latter, the 217.00 is up next, followed by a move towards April’s 30 daily high-turned-support at 216.60. Once surpassed, the next area of interest for GBP/JPY would be the July 2 high, now turned support, at 216.06.

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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