GBP/JPY Price Forecasts: Pound returns abopve 215.00 amid broad-based Yen weakness
- GBP/JPY returns to levels beyond 215.00 after bouncing up from the 214.60 area.
- The Yen remains vulnerable despite intervention warnings and BoJ tighthening hopes.
- The pair is showing an improving momentum, with 215.15 and 215.55 on the bulls' focus.
The Japanese Yen’s (JPY) mild recovery attempt seen during Friday’s Asian session has been short-lived. The British Pound (GBP) has regained lost ground, returning to levels above 215.00 at the time of writing, from session lows at 214.59, setting the GBP/JPY pair on track to complete a three-week rally.
The Yen remains on its back foot despite reiterated intervention warnings from Japanese authorities and growing expectations of an upcoming rate hike by the Bank of Japan (BoJ), and has given away practically all gains taken after an alleged intervention on April 30.
Japanese Finance Minister Satsuki Takayama assured on Friday that Tokyo authorities are ready to take “decisive action” against excessive volatility. Friday's was the last of a series of warnings launched this week, yet with limited success so far.
The Yen keeps bleeding amid a combination of comparatively low Japanese Government Bonds (JGBs) and concerns about the Japanese economy’s exposure to high Oil prices. The hawkish comments by the Bank of Japan’s (BoJ) Governor Kazuho Ueda, placing inflation at the forefront of the bank’s monetary policy, have been unable to provide any significant impulse to an ailing Yen.
Technical Analysis: Dips keep finding sellers
GBP/JPY trades at 215.04, holding a constructive bullish bias as it consolidates above the ascending trendline from mid-May lows. Momentum indicators in the 4-hour chart show mild bullish pressure with the Relative Strength Index (14) nearing 60, although the Moving Average Convergence Divergence (MACD) remains at marginally negative levels.
The pair, however, is likely to meet resistance at Thursday's highs near 215.15 and the weekly top, at the 215.55 area. Further up, the April 30 high, at 216.60, will come into focus. On the downside, initial support is seen at the trend-line area near 214.70, followed by the former congestion floor around 214.35. A move below these levels would open the way toward the May 21 and 28 lows, near 213.30.
(The technical analysis of this story was written with the help of an AI tool.)
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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