Yen Strength Caps GBP/JPY as Tokyo Inflation Fuels BOJ Hike Speculation

Yen Strength Caps GBP/JPY as Tokyo Inflation Fuels BOJ Hike Speculation

The GBP/JPY lost its shine on the strong Yen. It hit an intraday low of 193.61  and is currently trading around 193.93.  Intraday trend is bearish as long as resistance 194.60 holds.  

With the core CPI (excluding fresh food) rising 3.6% year-on-year, exceeding market expectations and accelerating from April, Tokyo's May 2025 CPI data show ongoing inflationary pressures; the headline CPI saw a modest cooling to 3.4%; food prices—especially non-fresh food and rice—remain major contributors, along with a worrying acceleration in services inflation indicating a pass-through of rising labor expenses; with the Bank of Japan (BOJ) already having discontinued its stimulus and raised rates, this persistent inflation, especially the core component, will maintain pressure on the BOJ to consider additional rate increases, although concerns about potential U.S. tariffs and slowing global demand could complicate their policy decisions.

The GBP/JPY pair is trading below   55 and  200 EMA (Short-term) and above  365 EMA (long-term on the 1-hour chart, confirming a mixed trend.  Any violation below 193.60  indicates the intraday trend is weak. A dip to 192.85/192/191.70/191 /190 is possible.  Immediate resistance is at 194.30, a breach above this level targets of 194.60/195/196.50/.

Market Indicators (4- hour)

CCI (50)- Bearish

Directional movement index - Bearish

Trading Strategy: Sell on rallies

 It Is good to sell on rallies around 194.28-30 with SL around 195 for a TP of 192.85.