CFD Trading Rate Great Britain Pound vs Japanese Yen (GBPJPY)

• GBP/JPY is rising as pre-election concerns the ruling LDP party could lose weakens the Yen. 
• A change of government or weaker ruling coalition could impact the BoJ’s decision making with consequences for the currency. 
• The Bank of England’s relatively more hawkish stance on interest rates is a further backwind for GBP/JPY. 

The GBP/JPY is trading over 1.0% higher on Wednesday in the 198.30s. A combination of political instability in Japan and shifting economic forecasts, coupled with differing monetary policy outlooks between the Bank of Japan (BoJ) and the Bank of England (BoE), are key elements shaping market sentiment and trading behavior.

The Japanese Yen (JPY) has been under considerable selling pressure due to domestic political uncertainty in Japan. Recent polls suggest that the ruling Liberal Democratic Party (LDP) may lose its majority in the upcoming general election. A potential leadership shift or the need for a coalition could complicate the government's policy-making, including monetary policy conducted by the Bank of Japan. Political instability often creates risk aversion, leading to a weakening of the affected currency, which, in this case, places downward pressure on the Yen. 

The International Monetary Fund's (IMF) downgrade of Japan's economic growth forecast to 0.3% for this year, down from a previous 0.7%, further exacerbates this pressure. A weaker economic outlook generally reduces demand for a currency, contributing to a decline in its value. In the near term the weak growth reflected in these revisions are contributing to downward momentum for the Yen, which can lead to an increase in the GBP/JPY exchange rate.

On the other hand, the Pound Sterling (GBP) is experiencing upward momentum against the Yen, supported by relatively more hawkish signals from the Bank of England (BoE). BoE Monetary Policy Committee (MPC) member Megan Greene’s remarks during the IMF meeting reinforced this sentiment. Despite recent data showing a drop in UK inflation to 1.7% in September, below the BoE's 2% target, Greene noted that the decrease was due to volatile components and would not sway her vote significantly. This suggests that the BoE may still prioritize tackling inflation, which supports expectations of tighter monetary policy. In contrast to Japan's more accommodative stance, this divergence can lead to an increase in the value of the Pound relative to the Yen.

Moreover, market participants are keenly awaiting BoE Governor Andrew Bailey’s upcoming speech, which could provide further insights into the bank’s future policy decisions, including potential rate cuts in November and December. While markets are speculating about the possibility of further rate reductions in the UK, the BoE’s relatively stronger position compared to the BoJ’s dovish policy stance is supporting the Pound, and the GBP/JPY.

Additionally, economic data releases such as the UK’s flash S&P Global/CIPS Purchasing Managers Index (PMI) for October are expected to show modest expansion in business activity. Positive data from the UK economy would further bolster the Pound, adding additional upward pressure to the GBP/JPY exchange rate.

In summary, the GBP/JPY exchange rate is being driven higher by a combination of the Yen's weakness, due to Japan's political and economic challenges, and the relative strength of the Pound, supported by the BoE’s more hawkish policy outlook. These factors collectively suggest an upward bias in the GBP/JPY pair in the near term.

• GBP/JPY drifts lower for the second straight day amid modest JPY strength. 
• Bets for faster BoE rate cuts undermine the GBP and weigh on the cross.
• The BoJ uncertainty might cap the JPY and help limit losses for spot prices.

The GBP/JPY cross kicks off the new week on a weaker tone and retreats further from its highest level since late July, around the 196.00 mark touched on Friday. Spot prices, however, remain confined in a familiar range held over the past two weeks or so and currently trade around the 194.70 region, down just over 0.20% for the day.

The Japanese Yen (JPY) continues with its relative outperformance for the second straight day amid renewed intervention fears, which, in turn, is seen as a key factor weighing on the GBP/JPY cross. In fact, Japan's top currency diplomat, Atsushi Mimura, warned against speculative trading and said on Friday that authorities are watching FX moves with a high sense of urgency. Adding to this, Japan's Deputy Chief Cabinet Secretary Kazuhiko Aoki noted that it is important for currencies to move in a stable manner reflecting economic fundamentals.

Meanwhile, a surprise fall in the UK Consumer Price Index (CPI) to the lowest level since April 2021 and below the Bank of England's (BoE) 2% target lifted bets for a 25 basis point (bps) interest rate cut at the November 7 meeting. Moreover, the money markets are pricing in the possibility of another BoE rate cut in December, which acts as a headwind for the British Pound (GBP) and exerts additional pressure on the GBP/JPY cross lower. That said, the uncertainty about the Bank of Japan's (BoJ) rate-hike plans should cap the JPY and offer support to the cross. 

BoJ Governor Kazuo Ueda said on Friday that the central bank must focus on the economic impact of unstable markets and risks from overseas. This comes on top of Japanese Prime Minister Shigeru Ishiba's surprise opposition to additional rate hikes and suggests the BoJ was in no rush to tighten its policy further ahead of the general election on October 27. Apart from this, the risk-on mood should cap the safe-haven JPY and limit losses for the GBP/JPY cross, warranting caution before placing aggressive bearish bets in the absence of any relevant macro data.

• GBP/JPY has formed a right-angle triangle which indicates a likely breakout higher. 
• The MACD momentum indicator is diverging bearishly with price, however, suggesting a mild downside risk.  

GBP/JPY has formed a right-angle triangle which indicates a breakout higher is likely. 

Price is more likely to break above the flat edge, according to technical analysis (TA) theory, which in this case runs along the topside of the pattern. 

GBP/JPY 4-hour Chart 

A decisive breakout above the top of the triangle would activate the pattern’s first upside target at 199.59, the 61.8% Fibonacci extrapolation of the height of the triangle (at its widest point) higher. This is the usual TA method for forecasting such moves. 

One bearish sign is that the Moving Average Divergence Convergence (MACD) momentum indicator has been diverging bearishly with price during the formation of the triangle. Whilst price has made a higher high, MACD has declined. This is a mildly bearish sign. 

A decisive breakout would be one accompanied by a long green candlestick that pierced cleanly through the top of the triangle at 196.00 and closed above near its high. This, or three green candlesticks in a row that broke cleanly above the flat top of the pattern. 

• GBP/JPY rises as UK Retail Sales unexpectedly grew by 0.3% MoM in September, defying market expectations of a 0.3% decline.
• The Pound Sterling may struggle as the BoE faces increasing pressure to accelerate rate cuts following lower inflation and jobs data.
• The Japanese Yen strengthened due to verbal intervention from Japanese authorities.

GBP/JPY continues to rise for the second consecutive day, trading around 195.90 during the Asian session. The Pound Sterling (GBP) gained momentum following a solid Retail Sales report from the United Kingdom (UK) released on Friday.

According to data from the Office for National Statistics (ONS), UK Retail Sales increased by 0.3% month-over-month in September, following a 1.0% rise in August. This was unexpected, as markets had anticipated a 0.3% decline for the month. On an annual basis, Retail Sales grew by 3.9%, compared to a 2.3% increase in August. Core Retail Sales, excluding automotive fuel, also rose by 0.3% month-over-month, down from the previous 1.1% growth, but better than the forecasted -0.3%.

Despite the positive Retail Sales report, the British Pound may encounter challenges as the Bank of England (BoE) faces mounting pressure to expedite rate cuts. This pressure stems from recent economic data showing declines in Consumer Price Index (CPI) and Producer Price Index (PPI) inflation figures, along with disappointing labor market statistics.

The Japanese Yen (JPY) gained ground, partly due to verbal intervention from Japanese authorities. Atsushi Mimura, Japan’s Vice Finance Minister for International Affairs and the top foreign exchange official stated on Friday that recent movements in the Yen have been "somewhat rapid and one-sided," emphasizing that excessive volatility in the foreign exchange market is undesirable.

Additionally, a spokesman for the Japanese government highlighted the importance of stable currency movements that reflect economic fundamentals, noting that authorities are closely monitoring foreign exchange fluctuations, particularly any speculative activity, with a heightened sense of urgency.

Japan's National Consumer Price Index (CPI) slowed to a year-on-year rate of 2.5% in September. Meanwhile, the Core CPI, which excludes volatile fresh food items, registered at 2.4%, a decrease from a 10-month high of 2.8%.

• GBP/JPY attracts sellers for the second straight day in reaction to softer UK CPI print.
• The data reaffirms bets for a BoE rate cut in November and weighs heavily on the GBP.
• A sustained break below the key 200-day SMA should pave the way for further losses.

The GBP/JPY cross attracts heavy selling following the release of the UK consumer inflation figures on Wednesday and retreats further from over a two-week high touched the previous day. The second straight day of a downfall drags spot prices to a multi-day low, around the 193.70 area during the first half of the European session, with bears now awaiting a break below the 200-day Simple Moving Average (SMA) before placing fresh bets. 

The UK Office for National Statistics (ONS) reported that the headline Consumer Price Index (CPI) remained flat in September and the yearly rate decelerated to 1.7% from 2.2% in August. This was the lowest reading since April 2021 and comes on top of the recent remarks by the Bank of England (BoE) Governor Andrew Bailey, saying that the central bank could cut interest rates more aggressively if there's further good news on inflation. The markets were quick to react and are now pricing in a 90% chance that the BoE will lower borrowing costs in November, which, in turn, weighs heavily on the British Pound (GBP). 

Meanwhile, the lack of specifics about the overall size of the fiscal stimulus from China left investors uncertain. Apart from this, persistent geopolitical risks stemming from the ongoing conflicts in the Middle East take a toll on the global risk sentiment, which is evident from a generally weaker tone across the equity markets. This, in turn, benefits the Japanese Yen's (JPY) relative safe-haven status and exerts additional pressure on the GBP/JPY cross. That said, doubts over the Bank of Japan's (BoJ) rate-hike plans keep a lid on any meaningful appreciating move for the JPY and should act as a tailwind for the currency pair. 

Even from a technical perspective, the GBP/JPY cross has been oscillating in a familiar range over the past two weeks or so. This constitutes the formation of a rectangle on the daily chart and points to indecision over the next leg of a directional move. Moreover, the aforementioned mixed fundamental backdrop makes it prudent to wait for strong follow-through selling and a sustained break below the 200-day SMA before confirming a bearish breakdown.

• GBP/JPY edges higher after wage data fails to meet expectations, undermining the Yen. 
• Sterling maintains its steady march after the BoE’s chief economist urges caution in cutting interest rates. 

GBP/JPY climbs back into positive territory just above 194.00 on Tuesday, as the Pound Sterling (GBP) makes a mild recovery against the Japanese Yen (JPY) which depreciates after the release of lower-than-expected Japanese wage data for August. 

Japanese Labor Cash Earnings rose 3.0% in August on a year-over-year basis, which is lower than the 3.1% estimated by economists, and the 3.4% in July (revised down from 3.6%), according to data from the Ministry of Economy, Trade and Industry of Japan. 

The lower-than-estimated rise in wages is mildly disinflationary and therefore likely to curb the chances of the Bank of Japan (BoJ) deciding to raise interest rates from their comparatively low 0.25% level. Interest rates remaining lower for longer will result in less foreign capital inflows to Japan, a reduction in demand for the Yen and a weaker currency. This, in turn, leads GBP/JPY to edge higher.

The Pound, meanwhile, regains its feet after the Chief Economist at the Bank of England (BoE) Huw Pill, said any future rate cuts by the bank should be made cautiously. This, in turn, helps GBP/JPY retain the upside. Prior to that Sterling had been selling off after his colleague, the Governor of the BoE Andrew Bailey, said the bank should become more “activist” in cutting interest rates, thereby suggesting more frequent or larger cuts might be on the horizon. 

GBP/JPY is in an overall short-term uptrend, as the Yen faced additional headwinds after the new Prime Minister Shigeru Ishiba said that interest rates should probably keep at their current low level because of the state of the economy. His comments struck a note of discord with those of the Governor of the BoJ Kazuo Ueda, who had said interest rates should rise if the incoming economic data continued to match forecasts. Ishiba later backtracked, saying that this did not mean he would put pressure on the BoJ in its decision-making process, relieving some of the bearish pressure on the currency. 

Overall the Yen is seen as still too weak because it makes imported goods expensive for consumers, and this led currency diplomat Atsushi Mimura to make a “verbal intervention” on Monday cautioning traders against “speculative moves”. That said, one factor putting a floor under the Yen’s devaluation is continued demand for it as a safe-haven amid an escalation of the conflict in the Middle East.

• GBP/JPY remains under some selling pressure for the second straight day on Friday. 
• BoE Governor Bailey’s dovish remarks on Thursday continue to undermine the GBP.
• Geopolitical risks benefit the safe-haven JPY and further exert pressure on the cross.
• The BoJ rate hike uncertainty cap gains for the JPY and limits losses for spot prices. 

The GBP/JPY cross finds some near the 191.70 region on Friday and for now, seems to have stalled the overnight sharp pullback from a one-week high – levels beyond the 195.00 psychological mark. Spot prices, however, remain in negative territory for the second straight day and currently trade just below mid-192.00s, down nearly 0.25% for the day.

The British Pound (GBP) continues to be undermined by the overnight dovish remarks by the Bank of England (BoE) Governor Andrew Bailey, saying that there was a chance that the central bank could become a bit more aggressive in cutting rates if there's further good news on inflation. Furthermore, geopolitical risks stemming from the ongoing conflicts in the Middle East drive some haven flows towards the Japanese Yen (JPY) and contribute to the offered tone surrounding the GBP/JPY cross. 

Meanwhile, Asahi Noguchi, a dovish Bank of Japan (BoJ) board member said on Thursday that the central bank has scope to raise interest rates further but must move cautiously and slowly to avoid hurting the economy. This, in turn, further underpins the JPY, though the uncertainty over future interest rate hikes by the BoJ limits the downside for the GBP/JPY cross. Japan's new Prime Minister Shigeru Ishiba said this week that Japan is not in an environment for an additional rate increase.

Furthermore, Japan's Economy Minister Ryosei Akazawa stated that the PM and the BoJ both agree that overcoming deflation is Japan's highest priority. Adding to this, BoE's Chief Economist Huw Pill said this Friday that it will be important to guard against the risk of cutting interest rates either too far or too fast. This assists the GBP/JPY cross to rebound around 70-80 pips from the daily swing low. That said, the lack of any follow-through buying warrants some caution for bullish traders.

• GBP/JPY witnessed heavy selling in reaction to the BoE Governor Bailey’s dovish remarks.
• Bailey said that the central bank could become "a bit more activist" on interest rate cuts.
• Middle East tensions benefit the JPY’s relative safe-haven status and weigh on the cross.

The GBP/JPY cross continues with its struggle to find acceptance above the 195.00 psychological mark for the second time in two weeks and retreats sharply from a one-week high touched earlier this Thursday. The downward trajectory drags spot prices to the 192.25-192.20 area during the first half of the European session and is exclusively sponsored by the emergence of heavy selling around the British Pound (GBP). 

In an interview with the Guardian, the Bank of England (BoE) Governor Andrew Bailey said that there was a chance that the central bank could become a bit more aggressive in cutting rates if there's further good news on inflation. Traders upped their bets for another 25-basis points interest rate cut by the BoE at its November meeting. This, in turn, drags UK gilts lower, along with the GBP, and prompts aggressive selling around the GBP/JPY cross.

Apart from this, a further escalation of geopolitical tensions in the Middle East benefits the Japanese Yen's (JPY) relative safe-haven status and contributes to the offered tone surrounding the currency pair. Iran launched over 200 ballistic missiles at Israel on Tuesday, while the latter conducted a precise air strike and bombed central Beirut in Lebanon during the early hours of Thursday, raising the risk of a full-blown war and undermining the risk sentiment. 

The JPY bulls, however, refrain from placing aggressive bets in the wake of the uncertainty over future interest rate hikes by the Bank of Japan (BoJ). In fact, Japan's new Prime Minister Shigeru Ishiba said on Wednesday that the country is not in an environment for an additional rate increase. Adding to this, Japan's newly appointed economy minister, Ryosei Akazawa, expects the BoJ to make careful economic assessments when raising interest rates again. 

Furthermore, BoJ board member Asahi Noguchi stated that the central bank must patiently maintain loose monetary conditions and will make gradual adjustments while carefully assessing whether inflation sustainably reaches the 2% target. This, in turn, warrants some caution before positioning for any further depreciating move for the GBP/JPY cross and supports prospects for an extension of the range-bound price action witnessed since the beginning of the current week.

• GBP/JPY regains positive traction on Wednesday, though it lacks follow-through buying.
• The BoJ rate hike uncertainty undermines the JPY and lends some support to the cross.
• Geopolitical risk helps limit deeper JPY losses and keep a lid on further gains for the pair.

The GBP/JPY cross attracts some dip-buying during the Asian session on Wednesday and reverses a part of the previous day's losses. Spot prices, however, remain below the technically significant 200-day Simple Moving Average (SMA) and currently trade around the 191.00 mark, up less than 0.15% for the day. 

The Japanese Yen (JPY) continues to be undermined by the uncertainty over further interest rate hikes by the Bank of Japan (BoJ), which, in turn, is seen as a key factor lending some support to the GBP/JPY cross. In fact, Japan's new Prime Minister Shigeru Ishiba said earlier this week that the BoJ's monetary policy must remain accommodative to underpin a fragile economic recovery.  Moreover, Ishiba seeks to secure a national mandate with an October 27 snap election, fueling political uncertainty and exerting additional pressure on the JPY.

That said, fears of a full-out war in the Middle East escalated further after Iran launched over 200 ballistic missiles at Israel on Tuesday. This, in turn, tempers investors' appetite for riskier assets, which is evident from a generally weaker tone across the global equity markets and should help limit deeper losses for the safe-haven JPY. Furthermore, markets are pricing in another BoJ rate hike by the end of this year. This marks a big divergence in comparison to bets for more rate cuts by the Bank of England (BoE) and should cap the GBP/JPY cross. 

In the absence of any relevant market-moving economic releases on Wednesday, the aforementioned fundamental backdrop warrants caution before placing fresh bullish bets around the currency pair. Even from a technical perspective, the 50-day SMA crossed below the 200-day SMA last month, forming a  'Death Cross' on the daily chart. Furthermore, the GBP/JPY cross has repeatedly failed to find acceptance above the 200-day SMA. Hence, strong follow-through buying is needed to support prospects for a further appreciating move.

• GBP/JPY struggles to capitalize on its modest intraday gains beyond the 200-day SMA.
• The GBP is pressured by a modest USD strength and acts as a headwind for the cross.
• The BoJ rate hike uncertainty keeps the JPY bulls on the defensive and lends support.

The GBP/JPY cross attracts some intraday sellers on Tuesday and retreats over 100 pips from the daily peak, around the 159.35 region amid the emergence of some selling around the British Pound (GBP). Spot prices drop to a fresh daily low during the early European session and currently trade just below the 192.00 mark, down nearly 0.20% for the day.

The US Dollar (USD) gains follow-through traction in the wake of the Federal Reserve (Fed) Chair Jerome Powell's overnight hawkish remains and turns out to be a key factor weighing on the British Pound (GBP). Apart from this, the intraday GBP fall lacks any obvious fundamental catalyst and is likely to remain limited amid expectations that the Bank of England's (BoE) rate-cutting cycle is likely to be slower than in the US and the Eurozone. This, along with the offered tone surrounding the Japanese Yen (JPY), should help limit the downside for the GBP/JPY cross. 

Japan's incoming Prime Minister (PM) Shigeru Ishiba expressed a cautious view about interest rate hikes by the Bank of Japan (BoJ) and said on Monday that he intends to call a general election on October 27. This, along with the optimism over a stimulus bonanza from China, undermines the safe-haven JPY and acts as a tailwind for the GBP/JPY cross. Spot prices, meanwhile, move little following the release of the final UK Manufacturing PMI, which was revised up to 45.0 for September as compared to the 44.8 flash print and the previous month's reading.

Nevertheless, the aforementioned fundamental backdrop makes it prudent to wait for a strong follow-through selling before positioning for any meaningful downside for the GBP/JPY cross. From a technical perspective, the recent repeated failures to find acceptance above the very important 200-day Simple Moving Average (SMA) and the formation of a  'Death Cross' on the daily chart – the 50-day SMA crossing below the 200-day SMA – warrant caution for aggressive bullish traders.

• GBP/JPY stages a solid intraday recovery from over a one-week trough touched earlier this Monday.
• A combination of factors weighs on the JPY and lends support to the cross amid a modest GBP uptick.
• The divergent BoJ-BoE policy expectations warrant caution before placing aggressive bullish bets.

The GBP/JPY cross attracts some dip-buyers in the vicinity of mid-189.00s, or a one-week low and for now, seems to have stalled its retracement slide from a nearly two-month peak touched on Friday. The move up lifts spot prices to the 191.00 neighborhood, back closer to the daily peak during the early European session, though the fundamental backdrop warrants some caution for bullish traders. 

The Japanese Yen (JPY) weakens in reaction to comments from Japan's incoming Prime Minister (PM) Shigeru Ishiba, saying that the Bank of Japan's (BoJ) monetary policy must remain accommodative to underpin a fragile economic recovery. This, along with news that the new PM is planning a general election for October 27 and mixed Japanese economic data, continues to undermine the JPY and lends support to the GBP/JPY cross. 

Meanwhile, the British Pound (GBP) draws support from a subdued US Dollar (USD) demand and expectations that the Bank of England's (BoE) rate-cutting cycle is likely to be slower than in the US. This turns out to be another factor acting as a tailwind for the GBP/JPY cross. That said, the growing market conviction that the BoJ will hike interest rates again by the end of this year should help limit any meaningful JPY losses.

Apart from this, the risk of a further escalation of geopolitical tensions in the Middle East should benefit the safe-haven JPY and contribute to capping the GBP/JPY cross. Israel expanded its confrontation with Iran's allies and launched aggressive aerial assaults on Sunday against Houthis in Yemen and Hezbollah in Lebanon. This, in turn, fuels concerns that the fighting could spin out of control and trigger an all-out war in the region.

From a technical perspective, the 50-day Simple Moving Average (SMA) crossed below the very important 200-day SMA earlier this month, forming a bearish 'Death Cross' on the daily chart. This further makes it prudent to wait for strong follow-through buying before positioning for the resumption of the recent goodish recovery from the monthly low in the absence of any relevant market-moving economic releases on Monday.

• GBP/JPY sells off following the defeat of Sanae Takaichi in the Japanese ruling party’s leadership run off. 
• Takaichi had warned that if elected she would restrict the BoJ from raising interest rates. 
• The Pound pulls back after Bailey indicates steady return to more normal rate environment. 

GBP/JPY declines by almost one and a half percentage points to trade in the 191.50s on Friday after the news that former Japanese defense minister Shigeru Ishiba beat his opponent Sanae Takaichi to win the ruling-LDP party’s leadership race run-off. Ishiba won by 215 votes to Sanae Takaichi’s 194 votes. 

The Japanese Yen had weakened on concerns Takaichi might win after she said that if elected she would not allow the interest rates to rise because a weak Yen was positive for exports. Her defeat now means she will not be able to restrict rate hikes. 

The Yen’s immediate reaction was to strengthen in all its pairs. The expectation of higher interest rates is positive for the currency since it reduces capital outflows to currencies offering higher returns. 

GBP/JPY came under further pressure after the Japanese Yen rose following the release of Tokyo inflation data early on Friday. The data showed the Tokyo Consumer Price Index (CPI) rose 2.2% in September, which whilst lower than the 2.6% previously, was in line with the BoJ’s forecast and the median. BoJ Governor Kazuo Ueda had said that if inflation data met the bank’s forecasts it would go ahead with plans to lift interest rates. 

The Pound Sterling, meanwhile, remains on a weaker footing after the Governor of the Bank of England (BoE) Andrew Bailey said earlier in the week that he saw interest rates continuing to fall gradually. Lower interest rates are negative for the Pound as they reduce capital inflows. 

“I do think the path for interest rates will be downwards, gradually, to the ´neutral’ rate,” Bailey said on Tuesday. The neutral rate of interest is the long run equilibrium level, or “ideal” level for interest rates in the economy. 

His remarks come after a close call five-to-four vote at the BoE’s August meeting backed up a quarter point cut from the bank, pushing borrowing costs down to 5.00%. Financial markets, meanwhile, are pricing in a drop to 4.5% by the end of 2024, and lower to 3.5% by the end of 2025.

GBP/JPY was buoyed on Wednesday, however, after BoE policymaker Megan Greene was more hawkish than Bailey when she said that a “cautious, steady-as-she-goes approach to monetary policy easing is appropriate.”

Greene added “I believe the risks to activity are to the upside, which could suggest that the long-run neutral rate is higher and - all else equal - our stance of policy isn’t as restrictive as we had thought.”  Greene was one of four on the MPC who voted to hold rates in August.

• GBP/JPY attracts some sellers to 191.85 in Friday’s early European session. 
• Former defense minister Shigeru Ishiba won the LDP leadership race run-off and will be Japan's next prime minister. 
• The BoE is expected to deliver another interest rate cut in any of its two policy meetings remaining this year. 

The GBP/JPY cross faces some selling pressure to around 191.85, snapping the three-day winning streak during the early European session on Friday. The winning of former defense minister Shigeru Ishiba in the Liberal Democratic Party's (LDP) leadership race run-off boosts the Japanese Yen (JPY) and creates a headwind for the cross. 

Japan’s ruling party holds its leadership election on Friday and the former defense minister Shigeru Ishiba won the LDP leadership race run-off. The Japanese Yen (JPY) gains traction in an immediate reaction to the outcome as Ishiba received 215 votes in the run-off while Sanae Takaich only got 194 votes. 

The Tokyo core Consumer Price Index (CPI), which excludes volatile fresh food costs, rose 2.0% in September from the previous year, the Statistics Bureau of Japan showed Friday. This figure matched the Bank of Japan’s (BoJ) target and the median market forecast. The headline Tokyo Consumer Price Index (CPI) increased 2.2% YoY in September, compared to a 2.6% rise in August. The Tokyo CPI inflation data indicates the Japanese economy is making progress in meeting the criteria for further interest rate hikes, which further boosts the JPY. 

On the other hand, the dovish comments from the Bank of England (BoE) Governor Andrew Bailey might weigh on the Pound Sterling (GBP). Bailey stated that the UK central bank should be able to lower interest rates gradually as it gains confidence that inflation will remain close to its 2% target. Economists expect the BoE to deliver one interest rate cut in any of its two policy meetings remaining this year. 

• GBP/JPY gathers strength to around 193.10 in Thursday’s early European session. 
• The uncertainty about the BoJ's interest rate path undermines the JPY. 
• BoE’s Greene said she prefers a cautious approach to cutting interest rates. 

The GBP/JPY cross extends the rally to near 193.10 during the early European session on Thursday. The prospect that the Bank of Japan (BoJ) would delay raising interest rates further this year weighs on the Japanese Yen (JPY). Traders will keep an eye on Japan’s Tokyo Consumer Price Index (CPI) for September, which is due on Friday.  

The JPY loses momentum after BoJ Governor Kazuo Ueda signalled that the Japanese central bank is not in a rush to raise interest rates. According to the BoJ meeting minutes released on Thursday, policymakers were divided on how quickly the central bank should raise interest rates further, citing uncertainty on the timing of the next increase in borrowing costs. Several board members noted it would be "appropriate" for the central bank to "start gradually adjusting the significantly low policy interest rate."

On the other hand, the growing speculation that the Bank of England's (BoE) rate-cutting cycle is more likely to be slower than previously expected provides some support to the Pound Sterling (GBP). BoE Governor Andrew Bailey said he was “very encouraged” by the downward path of inflation, and he expected the path for interest rates will be downwards gradually. Meanwhile, BoE policymaker Megan Greene said on Wednesday that she prefers a “cautious approach” to cutting interest rates, warning of the risks from strong wage growth and economic activity.

• GBP/JPY has tested a key resistance level and pulled back. 
• Notwithstanding the roadblock, the short-term trend remains bullish and could lead to more gains.

GBP/JPY is seen rising for the eighth consecutive day on Wednesday. It has tested and then pulled back from the key September 2 high at 193.49, a major resistance level. The short-term trend is bullish despite the roadblock and could continue, pending a decisive break. 

The 50% Fibonacci retracement level of the July decline at 194.03, could provide further resistance to bulls.

GBP/JPY Daily Chart 

GBP/JPY is in an established short-term uptrend after rising up off the September 11 low. Since it is a principle of technical analysis that “the trend is your friend” this uptrend is more likely than not to extend. 

The pair could simply continue higher, therefore, although it would need to decisively break above the resistance line at 193.49 to confirm such an extension. 

A decisive break would be one accompanied by a longer-than-average green candle that closed near its high, or three green candles in a row that broke above the level. 

The medium-term trend is sideways, however, signifying no bias in either direction, whilst the long-term trend is up.

• GBP/JPY has rallied to a key resistance level – the September 2 high. 
• It could face increased resistance and would need to decisively break higher to extend the trend.

GBP/JPY rises for the seventh consecutive day on Tuesday. It is now close to the key September 2 high at 193.49. This is also close to the 50% Fibonacci retracement level of the July decline at 194.03. These levels are likely to present significant resistance to the pair, which may pullback as a result.

GBP/JPY Daily Chart 

That said, GBP/JPY is in an established short-term uptrend since it pivoted at the September 11 low. Since it is a principle of technical analysis that “the trend is your friend” this uptrend is more likely than not to extend. 

There is, therefore, a chance the pair could simply continue higher. If it can decisively break above the resistance line at 193.49 it will confirm an extension of the short-term trend higher. 

A decisive break would be one accompanied by a longer-than-average green candle that closed near its high, or three green candles in a row that broke above the level. 

The medium-term trend is sideways, signifying no bias in either direction. The long-term trend is up.

• GBP/JPY rallies by more than a percent at the end of a strong week. 
• UK Retail Sales beat expectations and past prints adding fuel to the rally. 
• BoJ strikes dovish tone at meeting but Japanese inflation data hits ten-month high, limiting JPY losses. 

GBP/JPY rises over one-and-a-quarter percentage points on Friday, to trade in the 191.80s, as it builds on considerable gains made throughout the week. The pair extends its bullish run following major macroeconomic releases and events affecting both currencies. 

The Pound Sterling (GBP) is strengthening overall against the Japanese Yen (JPY), after the release of UK Retail Sales showed shoppers loosening their purse strings in August, data from the Office of National Statistics (ONS) showed on Friday. Retail Sales rose 1.0% MoM in August accelerating the 0.5% rise of July and roundly beating expectations of 0.4%.

The data suggests that shoppers in the UK are unphased by higher borrowing costs and are continuing to spend liberally. This is likely to cause upward pressure on prices and keep inflation elevated. This, in turn, is likely to keep the Bank of England (BoE) from cutting interest rates. By maintaining them at a relatively high level (5.0%) it will help the Pound to strengthen because higher interest rates increase foreign capital inflows. 

The Pound gained a leg up on Thursday after the board of the BoE voted eight to one to keep interest rates unchanged at its September meeting. The stance stands in contrast to most other central banks which are lowering interest rates as global inflationary pressures ebb. Sterling probably gained a further boost from the words of BoE policymaker Catherine Mann, who said about policy on Friday, that “it is better to remain restrictive for longer.”

GBP/JPY upside could be limited, however, after inflation data from Japan showed an uptick in consumer prices.

The National Consumer Price Index (CPI) for Japan rose 3.0% YoY in August,  according to data from the Statistics Bureau of Japan (SBJ) released overnight. This was higher than the 2.8% of July, and represented a ten-month high for the metric.  

National CPI ex Food, Energy, meanwhile, showed a 2.0% YoY rise from 1.9% previously, and National CPI ex Fresh Food a 2.8% YoY rise in August, in line with expectations but higher than the 2.7% of July. The data is likely to keep alive hopes the Bank of Japan (BoJ) will normalize policy by raising interest rates from their relatively low (0.25%) level. With such a move, in turn, helping to strengthen the JPY.   

The BoJ concluded its September policy meeting on Friday, and although it left interest rates unchanged – as widely expected – and BoJ Governor Kazuo Ueda struck a cautious tone, citing “high uncertainties surrounding Japan’s economic activity and prices”, the higher inflation readings released at the same time supported the Yen. 

• GBP/JPY turns positive for the fifth straight day and climbs to a nearly three-week top.
• BoJ Governor Ueda’s cautious remarks weigh on the JPY and lend support to the cross.
• The formation of a ‘Death Cross’ on the daily chart warrants caution for bullish traders.

The GBP/JPY cross turns positive for the fifth successive day following an intraday dip to the 188.70 area and jumps to a nearly three-week top during the first half of the European session on Friday. Spot prices reclaim the 191.00 mark in the last hour amid the emergence of some selling around the Japanese Yen (JPY), triggered by the Bank of Japan (BoJ) Governor  Kazuo Ueda's less hawkish remarks during the post-meeting press conference. 

In fact, Ueda noted that uncertainties surrounding Japan's economy, and prices remain high and that risks of inflation overshoot have diminished to some extent in the wake of the recent FX moves. This, along with the underlying bullish sentiment across the global financial markets, undermines the safe-haven JPY. Meanwhile, the British Pound (GBP) draws support from the Bank of England's (BoE) decision on Thursday to keep rates unchanged and run down its stock of government bonds by another £100 billion over the coming 12 months. This, in turn, provides an additional boost to the GBP/JPY cross and contributes to the move up. 

From a technical perspective, oscillators on the daily chart have been gaining positive traction and support prospects for a further appreciating move. That said, the 50-day Simple Moving Average (SMA) has fallen below the 200-day SMA, forming the 'Death Cross' pattern on the daily chart and warranting some caution for bullish traders. Hence, any subsequent move up might confront stiff resistance near the 50-day SMA, currently near the 191.75 region. This is followed by the 192.00 mark, above which the GBP/JPY cross could climb further, though is likely to remain capped near the 200-day SMA barrier near the 192.35-192.40 region. 

On the flip side, the 190.40-190.35 zone now seems to protect the immediate downside ahead of the 190.00 psychological mark and the 189.45 horizontal support. Some follow-through selling could drag the GBP/JPY cross towards the 189.00 mark en route to the daily swing low, around the 188.70-188.65 region. Failure to defend the said support levels will suggest that this week's goodish rebound from the vicinity of the monthly low has run its course and pave the way for deeper losses. Spot prices might then accelerate the fall towards the 188.00 round figure before eventually dropping to the 187.35 support zone and the 187.00 mark.

GBP/JPY daily chart

• GBP/JPY halts its winning streak after the release of the BoJ interest rates decision.
• The Bank of Japan decided to hold its current interest rate at 0.15% at Friday's meeting.
• Policymakers await August’s UK Retail Sales data to gather more insights into the developments in the UK economy.

GBP/JPY breaks its four-day winning streak, trading around 189.00 during the Asian session on Friday. The GBP/JPY cross faces challenges as the Japanese Yen (JPY) gains ground following the Bank of Japan (BoJ) policy decision on Friday, keeping its interest rate at 0.15%, as highly expected.

Additionally, Japan's Consumer Price Index (CPI) increased to 3.0% year-on-year in August, up from 2.8% previously, marking the highest level since October 2023. Additionally, the Core National CPI, excluding fresh food, reached a six-month high of 2.8%, rising for the fourth consecutive month and in line with market expectations.

Japan’s Finance Minister Shunichi Suzuki stated on Friday that he “will continue to monitor and analyze the impact of the latest US rate cut on the Japanese economy and financial markets.” Suzuki added that the Federal Reserve Bank’s (FRB) perspective on the US economy aligns with the Japanese government's view that the US economy is likely to expand.

In the United Kingdom (UK), the Bank of England (BoE) decided to maintain its interest rate at 5% on Thursday, as widely anticipated. The BoE had previously signaled the possibility of rate cuts earlier in the summer with a quarter-point reduction at the last meeting, but this move may have been premature.

Policymakers are now awaiting further developments in the UK economy before considering additional rate adjustments. On Friday, UK Retail Sales data for August will be closely watched, with expectations for the monthly rate to decline to 0.4% from 0.5%, while the annualized figure is anticipated to remain steady at 1.4%.

Out of the nine Monetary Policy Committee (MPC) members, BoE external member Swati Dhingra voted for cutting interest rates for the second consecutive time, while the remaining members supported maintaining rates at their current levels. Investors had anticipated that two MPC members would back a dovish policy decision.