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

• 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.