The GBP/JPY pared most of its gains on the strong yen. It hit a high of 193.11 and is currently trading around 191.49. Intraday trend is bullish as long as the support of 190.70 holds.
In 2025, the Bank of Japan (BoJ) and the Federal Reserve (Fed) are going their separate ways with their monetary policies because of different inflationary forces and economic agendas. The BoJ is increasing rates incrementally, with markets already anticipating another hike in 2025, supported by continued wage growth and inflation settling above 2%. On the other hand, the Fed is expected to start reducing rates in June 2025, with markets pricing 2-3 cuts by the end of the year, after softening inflation. The policy divergence has the potential to increase the USD/JPY gap, impact global capital inflows into emerging markets and risk assets, and pose inflation uncertainty and tariff-related risks
Technical Analysis Points to Further Downside
The GBP/JPY pair is trading above 34 and 55 EMA (Short-term) and 200 EMA (long-term on the 4-hour chart, confirming a bearish trend. Immediate resistance is at 191.60, a breach above this level targets 192/192.60/193.20/195/196. Downside support is at 191.50 with additional levels at 190.80/189.80/188.75/188/187.25/186/185.
Market Indicators
CCI (50)- Bullish
Directional movement index - Neutral
It is recommended to buy on dips around 191 with a stop-loss at 189.80 for a TP of 195.
