The GBP/JPY cross-pair is poised to finish Monday’s session with gains of over 0.14% as traders prepare for the beginning of Tuesday’s Asian session. The cross-pair has climbed above the 50-day Simple Moving Average (SMA) at 215.52, often seen as a breakout that opens the door to further upside. The pair trades slightly below 216.00 at the time of writing.
GBP/JPY Price Forecast: Technical Outlook
The GBP/JPY refreshed a ten-day high of 216.16 but is failing to hold above 216.00. Nevertheless, momentum has shifted upward, as indicated by the Relative Strength Index (RSI). The RSI, although bullish, turned flat, an indication of further consolidation, before the next leg up forms.
If GBP/JPY rises above 216.00, expect a move towards a downward resistance trendline near 217.50/65. Above this area, up next is 217.00, followed by the July 9 high of the day (HOD) at 218.01.
Conversely, if GBP/JPY tumbles below the 50-day SMA, a move towards the 100-day SMA of 214.65 is on the cards. A breach of the latter will expose the 200-day SMA at 212.32.
GBP/JPY Price Chart – Daily
Japanese Yen FAQs
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.
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.
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.
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.
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