GBP/JPY Cross Sees Further Selling Pressure

The GBP/JPY exchange rate experienced selling activity for the second consecutive day on Thursday, nearing the lower end of its weekly range, although it hasn’t shown much follow-through. During early trading in Europe, spot prices hovered around the mid-$214.00s, reflecting a decline of nearly 0.15% for the day.

Meanwhile, the USD/JPY pair has been trading close to the significant level of 160.00, putting traders on alert amid speculation of possible intervention by authorities to support the Japanese yen (JPY). This situation adds downward pressure on the Pound/JPY cross. However, yen supporters seem reluctant to push for aggressive positions, likely due to worries about Japan’s economic challenges stemming from conflicts in the Middle East and ongoing supply issues in the Strait of Hormuz.

On the other hand, the British pound (GBP) has been seeing some support from a weaker US dollar (USD), which has also influenced the ceasefire situation between Israel and Lebanon, helping to stabilize the GBP/JPY cross. Traders seem to have tempered expectations for more stringent policy moves from the Bank of England (BOE), now factoring in just one potential 25 basis point rate hike before year-end. This might limit significant gains for the pound and, consequently, the GBP/JPY cross.

Additionally, there’s a growing notion that the Bank of Japan (BoJ) may raise interest rates in its upcoming policy meeting on June 15th and 16th, which could bolster the yen and exert further pressure on the pound/yen cross. From a technical viewpoint, breaking below the 100-hour simple moving average (SMA) hints at the potential for an extended decline from the 215.50 region, which was reached earlier this week, marking a high not seen in over a month.