GBP/JPY rebounds as Japan-China tensions weigh on the Yen

• GBP/JPY edges higher as Japan-China frictions pressure the Yen.
• China expands export curbs, raising concerns over trade and supply chains.
• Interest-rate differentials keep the Pound supported against the Yen.

The British Pound (GBP) trades on the front foot against the Japanese Yen (JPY) on Friday, as the Yen weakens broadly amid growing frictions between Japan and China.

At the time of writing, GBP/JPY is trading around 211.55, snapping a three-day losing streak, though price action remains confined within a more than two-week consolidation range near its highest level since 2008.

The Japanese Yen has come under renewed selling pressure as investors react to escalating tensions between Tokyo and Beijing. The Wall Street Journal reported on Thursday that China has expanded export curbs on Japan, including restrictions involving rare earths and rare-earth magnet materials that are crucial for electronics and automotive supply chains.

The latest measures follow China’s earlier restrictions on exports of so-called “dual-use” items to Japan, citing national security concerns. Beijing has also launched an anti-dumping investigation into dichlorosilane imports from Japan, a chemical widely used in semiconductor production.

The latest tensions trace back to November 2025, when Japanese Prime Minister Sanae Takaichi said a potential Chinese move against Taiwan could pose a direct threat to Japan’s security.

With the economic calendar light in both the UK and Japan, GBP/JPY is likely to remain sensitive to Japan-China headlines.

On the monetary policy front, the wide interest-rate differential between the Bank of England (BoE) and the Bank of Japan (BoJ) continues to keep the Pound relatively favoured against the Yen, though prospects of further policy tightening by the BoJ and the BoE’s gradual easing path are tempering upside as investors await fresh guidance from central bank officials.