- The GBP/JPY pair rises 0.60% and approaches the resistance of 192.00, while the Japanese Yen weakens.
- The pair has fluctuated between 190.00 and 193.00 for 17 days, with significant moves restricted by crucial technical points.
- Possible intervention by the Japanese authorities could drive GBP/JPY lower, seeking initial support at the Ichimoku cloud high at 189.00.
The GBP/JPY pair advanced during the North American session, rising 0.60%, while the Japanese Yen (JPY) remains the weakest currency on Monday. At the time of writing, the pair was trading at 191.92, far from reaching 192.00.
GBP/JPY Price Analysis: Technical Outlook
Over the last 17 days, GBP/JPY has remained within the ranges of 190.00-193.00, unable to break below/above the first key support and resistance levels, which has kept the pair within the range.
Should the Japanese authorities intervene, the GBP/JPY could fall below 190.00, sending the pair falling towards the top of the Ichimoku (Kumo) cloud at 189.00, closely followed by the 100 moving average days (DMA) at 187.29.
On the other hand, buyers reclaiming 193.00 look to challenge the yearly high at 193.54, ahead of 194.00.
GBP/JPY Price Action – Daily Chart
Pound Sterling FAQ
What is the Pound Sterling?
The British Pound (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded currency unit in the world, with 12% of all transactions and an average of $630 billion per day, according to 2022 data.
Its key currency pairs are GBP/USD, also known as “Cable”, which represents 11% of the forex market, GBP/JPY, or the “Dragon” as it is known to traders (3%), and EUR/GBP (2%). The pound sterling is issued by the Bank of England (BoE).
How do Bank of England decisions influence the Pound Sterling?
The most important factor influencing the value of the Pound Sterling is the monetary policy decided by the Bank of England. The Bank of England bases its decisions on achieving its main objective of “price stability”, that is, a stable inflation rate of around 2%. Its main tool to achieve this is the adjustment of interest rates.
When inflation is too high, the Bank of England tries to contain it by raising interest rates, which makes access to credit more expensive for individuals and companies. This is generally positive for the GBP, as higher interest rates make the UK a more attractive place for global investors to park their money.
When inflation is too low, it is a sign that economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to make credit cheaper, so that companies borrow more to invest in projects that generate growth.
How does economic data influence the value of the Pound?
The published data gauges the health of the economy and may influence the value of the Pound sterling. Indicators such as GDP, manufacturing and services PMIs, and employment can influence the direction of the Pound.
A strong economy is good for the British pound. Not only does it attract more foreign investment, but it may encourage the Bank of England to raise interest rates, which will directly strengthen the Pound. Otherwise, if economic data is weak, the pound is likely to fall.
How does the trade balance affect the Pound?
Another significant data for the pound sterling is the trade balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports during a given period.
If a country produces highly sought-after exports, its currency will benefit exclusively from the additional demand created by foreign buyers wishing to purchase these goods. Therefore, a positive net trade balance strengthens a currency and vice versa for a negative balance.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
