GBP/JPY Price Forecast: Bulls reclaim 218.00 as RSI improves
- GBP/JPY rebounds from ten-day low as buyers reclaim 218.00.
- RSI momentum favors upside, though intervention risk remains elevated.
- Break above 219.00 exposes 219.57/61 and 220.00 next.
The GBP/JPY advances by over 0.30%, rising above 218.00, as risk appetite improves amid overall US Dollar weakness following the Federal Reserve's monetary policy decision. The pair trades near 218.50 after hitting a low of the day (LOD) of 217.16.
GBP/JPY Price Forecast: Technical outlook
The cross-pair was headed to extend its losses after reaching a ten-day low. However, the GBP/JPY followed the direction of the GBP/USD pair after the Fed’s decision.
Momentum favours further upside as depicted in the Relative Strength Index (RSI). Hence, the path of least resistance is tilted to the upside, but a potential intervention in the FX markets by Japanese authorities could open the door for further downside.
For a bullish continuation, the first resistance for GBP/JPY would be the 219.00 psychological level. Above this area sits the confluence of the July 15 and 15 daily peaks at 219.57/61, followed by the 220.00 milestone.
On the downside, the first support is 218.00. A breach of the latter will expose the low of the day (LOD) at 217.16, followed by the April 30 daily high-turned-support at 216.60. Once hurdled, the next stop is the 50-day Simple Moving Average (SMA) at 215.62.
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.