The British pound has lost some strength following the appointment of new Prime Minister Andy Burnham, with the pound/yen pair stabilizing around 218.20. There are concerns about potential intervention from Japanese authorities, which have limited the pair’s upward movement, keeping it close to the highs seen earlier this year on July 15.
GBP/JPY Price Forecast: Technical Outlook
The recent pullback that lasted for four trading days stopped at around 217.50, close to the day’s low of 217.53. Since then, GBP/JPY has bounced back to the 218.00 mark, giving buyers another chance to reach for higher values.
The Relative Strength Index (RSI) shows a bullish momentum, though it seems to be moving sideways, hinting that the pair could continue in a similar pattern.
For the bullish trend to persist, GBP/JPY would need to surpass the key level of 218.50 before aiming for 219.00. Once that level is breached, the next target would be the year-to-date high of 219.61, which could push it above 220.00.
On the downside, if there’s a significant drop below the low from July 21 at 217.53, it might set the stage for a decline towards 217.00. Further down, support is seen at the April 30 high of 216.60, followed by the 50-day simple moving average (SMA) at 215.00.
GBP/JPY Price Chart – Daily
Frequently asked questions about the Japanese Yen
The Japanese Yen (JPY) is among the most widely traded currencies globally. Its valuation largely reflects trends in Japan’s economy, influenced by factors such as the Bank of Japan’s policies, differences in Japanese and U.S. bond yields, and overall trader sentiment.
A key mission of the Bank of Japan involves exchange control, making its activities pivotal for the yen. The Bank occasionally intervenes in currency markets, typically aiming to lower the yen’s value, though such actions are limited due to political considerations with major trading partners. The ultra-loose monetary policy from 2013 to 2024 has widened the gap between the Bank of Japan and other central banks, causing the yen to weaken against other currencies. Recently, signs of a gradual tightening in this policy have provided some support to the yen.
Over the last decade, the Bank of Japan’s commitment to a very lenient monetary policy has led to a growing divergence from other central banks, especially the US Federal Reserve. This has reinforced the widening gap between 10-year bonds in the U.S. and Japan, favoring the dollar over the yen. However, the ongoing adjustment of Japan’s policies, combined with rate cuts from other major central banks, is starting to narrow that gap.
The Japanese yen is often viewed as a safe haven during times of market stress. Investors tend to flock to it for stability, which generally results in an increase in its value when riskier investments face turmoil.
