The GBP/JPY was one of the worst performers this month due to board-based Yen strength. It hit an intraday low of 187.64 and is currently trading around 189. Intraday trend is bearish as long as resistance 190 holds.
The Bank of England and the Bank of Japan, lately, their interest rate policies have influenced the GBP/JPY exchange rate which has recently been declining. The BoJ is also to increase its interest rates further into 2025 with the IMF expecting two additional increases this year and two more in 2026. In total, such slow and moderate increases are made in an attempt to contain rising price pressures towards reaching the target of inflation as desired by the bank. This makes comments by Bank of Japan Governor Kazuo Ueda boost market expectations of a hike in the rate from 0.25% to 0.50%. More hikes in the policy rate in 2025 for Japan would indicate divergence in monetary policies among the advanced economies in that year
Technical Analysis of GBP/JPY
The GBP/JPY pair is trading below 34 and 55 EMA (Short-term) and 200 EMA (long-term) on the 4-hour chart, confirming a bearish trend. Immediate resistance is at 189.20; a breach above this level targets of 189.70/190/191/191.78/192.21/193/193.36/194/195/195.60/196.25/197. Downside support is at 188.30 with additional levels at 187.65/186.78.
Market Indicators
CCI (50)- bearish
Directional movement index - bearish
It is recommended to sell on rallies around 189.35-40 with a stop-loss at 190.10 for a TP of 187.65/185.
