GBP/JPY: Recent Bullish Move Fails to Break the 192.00 Level
Since February 11, the British pound has gained more than 2.5% against the Japanese yen. However, the recent bullish momentum has struggled to break through the key resistance level, and now a new correction in favor of the yen appears to be underway.
Central Bank Policies Remain Crucial
The ongoing monetary policy divergence between the Bank of England (BoE) and the Bank of Japan (BoJ) is a crucial factor in this market scenario.
On February 6, the Bank of England decided to keep its interest rate steady at 4.5%. However, it remains unclear whether the BoE will maintain this policy in future decisions.
On the other hand, Japan's monetary stance has become increasingly aggressive. In January 2025, the Bank of Japan raised its interest rate to 0.5%, the highest level since 2008 and the BoJ has signaled a more aggressive tightening approach, aiming to strengthen the yen and make it more competitive against its peers.
In the long run, Japan’s new aggressive policy stance has played a key role in the recent downward movements in GBP/JPY.
Higher returns in a traditionally safe market like Japan attract greater demand for the yen, reducing the appeal of the pound.
As long as Japan maintains this hawkish policy and uncertainty persists regarding the BoE’s future rate outlook, it is likely that yen demand will continue to grow, this could reinforce downward pressure on GBP/JPY.
Consistent Downtrend:
Since July 2024, the GBP/JPY pair has followed a sustained downtrend, which at some points has turned into a sideways movement between the 192.427 resistance level and the 187.328 support level.
The current bearish bias has been strong enough to produce lower highs, keeping the price within a long-term downtrend in the short term.
However, if the price moves back toward the 194.323 zone, where the 100-period and 50-period moving averages converge along with the downtrend line, it could signal a threat to the ongoing bearish trend. If buyers manage to push the price back to this level, it could be a important warning sign.
ADX Indicator:
The ADX line is oscillating near the neutral 20 level, indicating that the last 14 periods lack a strong directional trend.
This can be explained by the recent bullish rebound, which failed to break through resistance.
If the ADX remains at this level, the price may continue in a prolonged sideways trend over the next few trading sessions.
RSI Indicator:
A similar scenario is unfolding in the RSI, where the line is hovering around the neutral 50 level.
This indicates that bullish and bearish impulses from the last 14 periods are in balance.
This could reinforce a lack of clear direction for GBP/JPY in the 190.00 zone in the near term.
Key Levels to Watch:
192.427 – Near-Term Resistance:
This level represents the most significant neutral area in recent months and aligns with the 38.2% Fibonacci retracement level.
If price reaches this level again, it may struggle to break through due to strong resistance at both 192.427 and 194.323, where several technical indicators converge.
That said, a breakout above this entire zone could trigger a major bullish move in the long term.
187.328 – Key Support:
This level marks the lows recorded since July 2024.
A bearish breakout below this level could lead to new lows in the short term and reinforce the bearish bias established since December.
198.525 – Long-Term Resistance:
This distant resistance level aligns with the 61.8% Fibonacci retracement.
If price eventually rallies to this level, it would completely invalidate the ongoing downtrend in GBP/JPY.
By Julian Pineda, CFA – Market Analyst
Central Bank Policies Remain Crucial
The ongoing monetary policy divergence between the Bank of England (BoE) and the Bank of Japan (BoJ) is a crucial factor in this market scenario.
On February 6, the Bank of England decided to keep its interest rate steady at 4.5%. However, it remains unclear whether the BoE will maintain this policy in future decisions.
On the other hand, Japan's monetary stance has become increasingly aggressive. In January 2025, the Bank of Japan raised its interest rate to 0.5%, the highest level since 2008 and the BoJ has signaled a more aggressive tightening approach, aiming to strengthen the yen and make it more competitive against its peers.
In the long run, Japan’s new aggressive policy stance has played a key role in the recent downward movements in GBP/JPY.
Higher returns in a traditionally safe market like Japan attract greater demand for the yen, reducing the appeal of the pound.
As long as Japan maintains this hawkish policy and uncertainty persists regarding the BoE’s future rate outlook, it is likely that yen demand will continue to grow, this could reinforce downward pressure on GBP/JPY.
Consistent Downtrend:
Since July 2024, the GBP/JPY pair has followed a sustained downtrend, which at some points has turned into a sideways movement between the 192.427 resistance level and the 187.328 support level.
The current bearish bias has been strong enough to produce lower highs, keeping the price within a long-term downtrend in the short term.
However, if the price moves back toward the 194.323 zone, where the 100-period and 50-period moving averages converge along with the downtrend line, it could signal a threat to the ongoing bearish trend. If buyers manage to push the price back to this level, it could be a important warning sign.
ADX Indicator:
The ADX line is oscillating near the neutral 20 level, indicating that the last 14 periods lack a strong directional trend.
This can be explained by the recent bullish rebound, which failed to break through resistance.
If the ADX remains at this level, the price may continue in a prolonged sideways trend over the next few trading sessions.
RSI Indicator:
A similar scenario is unfolding in the RSI, where the line is hovering around the neutral 50 level.
This indicates that bullish and bearish impulses from the last 14 periods are in balance.
This could reinforce a lack of clear direction for GBP/JPY in the 190.00 zone in the near term.
Key Levels to Watch:
192.427 – Near-Term Resistance:
This level represents the most significant neutral area in recent months and aligns with the 38.2% Fibonacci retracement level.
If price reaches this level again, it may struggle to break through due to strong resistance at both 192.427 and 194.323, where several technical indicators converge.
That said, a breakout above this entire zone could trigger a major bullish move in the long term.
187.328 – Key Support:
This level marks the lows recorded since July 2024.
A bearish breakout below this level could lead to new lows in the short term and reinforce the bearish bias established since December.
198.525 – Long-Term Resistance:
This distant resistance level aligns with the 61.8% Fibonacci retracement.
If price eventually rallies to this level, it would completely invalidate the ongoing downtrend in GBP/JPY.
By Julian Pineda, CFA – Market Analyst
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.