- GBP/JPY slides down as the demand for sure shelter increases before the tariff deadline of President Trump of July 9.
- The Prime Minister of the United Kingdom, Keir Starmer, faces political pressure from the Labor Party, limiting the upward potential of the Libra.
- GBP/JPY goes back as the technical resistance is strengthened around 198.00
The Japanese Yen (JPY) is strengthening against the pound sterling (GBP) on Friday as the markets become cautious before the weekend.
With the GBP/JPY, retreating after failing to gain traction above the psychologically significant level of 198.00 on Thursday, the price action of Friday has been promoted by an increase in the demand for safe shelters before the deadline of tariffs of US president Donald Trump on July 9.
At the time of writing, the GBP/JPY is quoted below the simple mobile average (SMA) of 10 days, providing short -term resistance in 197.61. The immediate support is found in the Round Psychological number of 197.00, whose rupture could trigger a deeper correction towards the Fibonacci recoil level of 23.6% of the upward trend from April to July in 195.41.
GBP/JPY is still vulnerable to the broader macro-fundamental background
The Prime Minister of the United Kingdom, Keir Starmer, is under a growing scrutiny after recent commitments on well -being and growing disagreements within the Labor Party on the Budget Strategy and the proposed spending cuts.
These internal challenges, together with concerns about increasing deficits and the lack of a well -defined fiscal plan, have been hindering the impulse in the GBP/JPY exchange rate.
Meanwhile, in Japan, Yen is still under pressure due to the continuous commitment of the Bank of Japan (BOJ) with an ultra-flexible monetary policy. This approach contrasts with the hardening measures observed in other important economies.
In addition, renewed commercial tensions with the United States, resulting from Japan’s reluctance to import US rice, have triggered a commercial war between the two nations. With concerns about possible increases in tariffs and export restrictions related to technology and cars before the deadline of tariffs on July 9, limiting YEN profits.
GBP/JPY goes back as the technical resistance is strengthened around 198.00
In the daily chart below, the GBP/JPY remains in a generally bullish structure. The price action currently remains above its 200 -day SMA, offering long -term support in 193.55.
However, a clear break of the 198.00 level is required before the torque can continue with confidence its ascending trajectory. The ability to do it would bring back the recent maximum of June in 198.81.
GBP/JPY DAILY GRAPH
Meanwhile, the relative force index (RSI) is located about 55, indicating a neutral momentum with a slight bullish inclination.
If the torque manages to overcome the resistance around 198.00–198.81, it could resume its upward trend, while a fall below 195.41 could expose deeper Fibonacci supports, particularly about 193.30 and the 200 -day SMA.
Feeling Risk – Frequently Questions
In the world of financial jargon, the two terms “appetite for risk (Risk-on)” and “risk aversion (risk-off)” refers to the level of risk that investors are willing to support during the reference period. In a “Risk-on” market, investors are optimistic about the future and are more willing to buy risk assets. In a “Risk-Off” market, investors begin to “go to the safe” because they are concerned about the future and, therefore, buy less risky assets that are more certain of providing profitability, even if it is relatively modest.
Normally, during periods of “appetite for risk”, stock markets rise, and most raw materials – except gold – are also revalued, since they benefit from positive growth prospects. The currencies of countries that are large exporters of raw materials are strengthened due to the increase in demand, and cryptocurrencies rise. In a market of “risk aversion”, the bonds go up -especially the main bonds of the state -, the gold shines and the refuge currencies such as the Japanese yen, the Swiss Franco and the US dollar benefit.
The Australian dollar (Aud), the Canadian dollar (CAD), the New Zealand dollar (NZD) and the minor currencies, such as the ruble (Rub) and the South African Rand (Tsar), tend to rise in the markets in which there is “appetite for risk.” This is because the economies of these currencies depend largely on exports of raw materials for their growth, and these tend to rise in price during periods of “appetite for risk.” This is because investors foresee a greater demand for raw materials in the future due to the increase in economic activity.
The main currencies that tend to rise during the periods of “risk aversion” are the US dollar (USD), the Japanese yen (JPY) and the Swiss Franco (CHF). The dollar, because it is the world reserve currency and because in times of crisis investors buy American public debt, which is considered safe because it is unlikely that the world’s largest economy between in suspension of payments. The Yen, for the increase in the demand for Japanese state bonds, since a great proportion is in the hands of national investors who probably do not get rid of them, not even in a crisis. The Swiss Franco, because the strict Swiss bank legislation offers investors greater protection of capital.
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.
