- The GBP/JPY crossing is pressed for a combination of factors, although it lacks follow -up sales.
- The demand for safe refuge in recovery and divergent expectations of the BOJ and the BOE weigh on cash prices.
- The technical configuration supports the possibility that buyers arise at lower levels.
The GBP/JPY crossing fights to capitalize on the modest profits of the previous day and attract new sellers during Thursday’s Asian session, although it lacks follow -up. Cash prices remain confined in the weekly range and are currently negotiated around the 195.55 area, with a 0.20% drop in the day, while the operators now expect the publication of the monthly GDP of the United Kingdom to obtain a new significant impulse.
The Japanese Yen (JPY) is strengthened on all fronts in reaction to the new tariff threat of US President Donald Trump and the increase in geopolitical risks, which weighs on the feeling of investors and benefits traditional assets of safe refuge. The sterling pound (GBP), on the other hand, continues with its relative low performance following the bets that the Bank of England (BOE) will cut interest rates twice this year. This marks a significant divergence regarding the expectations that the Bank of Japan (BOJ) proceed with a monetary tightening and suggests that the path of lower resistance for the GBP/JPY crossing is down.
From a technical perspective, the price action in rank could still be categorized as a phase of consolidation of precious metals in the context of the recent considerable rebound from the very important simple mobile average (SMA) of 200 days. In addition, the oscillators in the daily chart remain comfortably in positive territory and are still far from being in the overcompra zone. This, in turn, suggests that any subsequent sliding towards the 195.00 psychological brand is likely to attract buyers in the fall, which should limit the decline for the GBP/JPY crossing near the weekly oscillating minimum, around the region of 194.80-194.75, played on Tuesday.
However, a convincing rupture below the latter could cause some technical sales and drag cash prices towards the round figure of 194.00 en route to the following relevant support near the horizontal zone of 193.40. The GBP/JPY crossing could extend down even more and eventually fall below the 193.00 mark, to challenge the 200-day SMA, currently located near the region of 192.85-192.80.
On the contrary, the 195,85-196.00 area now seems to have emerged as an immediate barrier. This is followed by the maximum oscillating of May, around the region of 196.25-196.30. A sustained strength beyond the latter could be seen as a new trigger for the bullies and raise the GBP/JPY crossing to the 197.00 mark for the first time since January. The impulse could be extended to the obstacle of 197.40-197.50 en route to the 198.00 mark and the 198.25 region, or the peak of the year to date reached in January.
GBP/JPY DAILY GRAPH
And in Japanese faqs
The Japanese Yen (JPY) is one of the most negotiated currencies in the world. Its value is determined in general by the march of the Japanese economy, but more specifically by the policy of the Bank of Japan, the differential between the yields of the Japanese and American bonds or the feeling of risk among the operators, among other factors.
One of the mandates of the Bank of Japan is the currency control, so its movements are key to the YEN. The BOJ has intervened directly in the currency markets sometimes, generally to lower the value of YEN, although it abstains often due to the political concerns of its main commercial partners. The current ultralaxy monetary policy of the BOJ, based on mass stimuli to the economy, has caused the depreciation of the Yen in front of its main monetary peers. This process has been more recently exacerbated due to a growing divergence of policies between the Bank of Japan and other main central banks, which have chosen to abruptly increase interest rates to fight against inflation levels of decades.
The position of the Bank of Japan to maintain an ultralaxa monetary policy has caused an increase in political divergence with other central banks, particularly with the US Federal Reserve. This favors the expansion of the differential between the American and Japanese bonds to 10 years, which favors the dollar against Yen.
The Japanese Yen is usually considered a safe shelter investment. This means that in times of tension in markets, investors are more likely to put their money in the Japanese currency due to their supposed reliability and stability. In turbulent times, the Yen is likely to be revalued in front of other currencies in which it is considered more risky to invest.
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.
