Bearish Breakout: GBP/JPY Falls Below Key EMAs, Eyes 196.25

The GBP/JPY declined more than 100 pips in the past two days on board-based Pound weakness. It hit an intraday low of  196.96 and is currently trading around 198.  Intraday trend is bearish as long as the resistance at 198.45 holds.

Unanimously agreed, the Bank of Japan held its overnight policy rate at 0. 5% on July 31, 2025—its fourth successive meeting without change—in line with expert projections. Driven by increasing food costs, it raised its core inflation forecast for the present fiscal year to 2. 7% (from 2. 2%) and raised 2026 and 2027 projections to 1. 8% and 2. 0%, respectively. The BOJ painted a more positive economic picture—citing a 1. 7% rise in factory output in June and less export uncertainty following the U. S. –Japan trade deal—while cautioning that U. S. tariffs and global slowdowns still present hazards. Maintaining a cautious, data-driven posture, it indicated possible rate increases later this year if inflation and growth stay on course, a prospect driving the yen against the dollar.

‘The GBP/JPY pair is trading below  55 and  200 EMA (Short-term) and 365 EMA (long-term) on the 60-min chart, confirming a bearish trend.  Any violation below 196.70 indicates the intraday trend is weak. A dip to 196.25/195.25/194/193.70 is possible.  Immediate resistance is at 197.85 a breach above this level targets of 198.40/198.85/199.20/200/202/204.

Market Indicators (60-min chart)

CCI (50)- Bearish

Directional movement index - Bearish

Trading Strategy:  Sell

 
 It is good to sell on rallies around 198.28-30 with SL around 199.20  for a TP of 196.15/194.85