- The GBP/JPY reaches a new annual maximum of 199.48.
- The tariff threats of the United States against Japan weigh on the Japanese yen.
- The overcompra signs and wedge resistance suggest a limited rise potential for the short -term GBP/JPY.
The sterling pound (GBP) reached a new annual maximum against the Japanese Yen (JPY) on Tuesday, since the tariff threats of the United States (USA.) About Japan weighed on the JPY.
At the time of writing, the GBP/JPY is quoted above 199.00 after reaching a maximum of 199.48 in the European session.
The Trump administration sent to Japan a formal letter on Monday informing them that Japanese imports to the US will face a 25% tariff position as of August 1.
At a conference in Tokyo on Tuesday, Japanese Prime Minister Shigeru Ihiba emphasized Japan’s intention to continue conversations to prevent climbing and protect bilateral commercial ties.
Meanwhile, the main commercial negotiator of Japan, Ryosei Akazawa, reiterated that “it makes no sense to reach an agreement with the USA without an agreement on automotive tariffs.”
The tariff threats of the USA.
Although the three -week extension of the tariffs offers Japan a limited window to end a commercial agreement with the United States, existing tariffs are already weighing on the Japanese yen.
The GBP/JPY remains firm above 199.00 while the RSI approaches the overcompra territory
The GBP/JPY is quoted around 199.20 on Tuesday, maintaining its bullish trajectory within an upwarded ascending wedge pattern.
The pair has benefited from the sustained weakness of Japanese Yen amid renewed commercial tensions with the United States, which have eroded the demand of Yen as a safe refuge.
The price action is consolidating above the psychological level of 199.00, providing imminent support for the torque.
With the relative force index (RSI) around 62, the market is approaching overcompra territory, suggesting the potential of a short -term consolidation or a setback.
GBP/JPY daily graphics
With the relative force index (RSI) around 62, the market is approaching overcompra territory, suggesting the potential of a short -term consolidation or a setback. The immediate support is seen in 198.81, followed by the simple mobile socks of 10 days and 20 days in 197.91 and 197.00, respectively.
A rupture below these levels would weaken the bullish structure and expose to the GBP/JPY to a deeper setback towards the 50 -day SMA in 195.03.
Meanwhile, the maximum intradica of 199.48 remains resistance, marking the upper limit of the ascending wedge. Above that is the maximum of October 199.81 and the next psychological level of 200.00.
Japanese – frequent questions
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.
