- GBP/JPY reaches a recent year-to-date excessive of 199.48.
- US tariff threats towards Japan weigh on the Japanese Yen.
- Overbought alerts and wedge resistance recommend a restricted upside for GBP/JPY within the close to time period.
The British Pound (GBP) reached a brand new YTD excessive towards the Japanese Yen (JPY) on Tuesday as United States (US) tariff threats on Japan weighed on the JPY.
On the time of writing, GBP/JPY is buying and selling above 199.00 after reaching a excessive of 199.48 within the European session.
The Trump Administration despatched Japan a proper letter on Monday informing them that Japanese imports to the US will face a 25% tariff cost from August 1.
At a convention in Tokyo on Tuesday, Japan’s Prime Minister Shigeru Ishiba emphasised Japan’s intent to proceed talks to stop escalation and defend bilateral commerce ties.
In the meantime, Japan’s high commerce negotiator, Ryosei Akazawa, reiterated that “There is no level hanging a cope with the US with out an settlement on car tariffs.”
The US tariff threats towards Japan are making the Yen much less enticing, serving to the GBP/JPY pair transfer increased.
Though the three-week tariff extension affords Japan a restricted window to finalize a commerce settlement with the USA, current tariffs are already weighing on the Japanese Yen.
GBP/JPY holds agency above 199.00 because the RSI nears oversold territory
GBP/JPY is buying and selling close to 199.20 on Tuesday, sustaining its bullish trajectory inside a well-defined ascending wedge sample.
The pair has benefited from sustained Japanese Yen weak point amid renewed commerce tensions with the USA, which have eroded demand for the Yen as a secure haven.
Worth motion is firming above the 199.00 psychological degree, offering imminent assist for the pair.
With the Relative Power Index (RSI) hovering round 62, the market is approaching overbought territory, suggesting the potential for short-term consolidation or a pullback.
GBP/JPY each day chart
With the Relative Power Index (RSI) hovering round 62, the market is approaching overbought territory, suggesting the potential for short-term consolidation or a pullback. Instant assist is seen at 198.81, adopted by the 10-day and 20-day Easy Shifting Averages at 197.91 and 197.00, respectively.
A break beneath these ranges would weaken the bullish construction and expose GBP/JPY to a deeper retracement towards the 50-day SMA at 195.03.
In the meantime, the intraday excessive of 199.48 stays as resistance, marking the higher boundary of the rising wedge. Above that’s the October excessive of 199.81 and the subsequent psychological degree of 200.00.
Japanese Yen FAQs
The Japanese Yen (JPY) is likely one of the world’s most traded currencies. Its worth is broadly decided by the efficiency of the Japanese financial system, however extra particularly by the Financial institution of Japan’s coverage, the differential between Japanese and US bond yields, or threat sentiment amongst merchants, amongst different elements.
One of many Financial institution of Japan’s mandates is foreign money management, so its strikes are key for the Yen. The BoJ has instantly intervened in foreign money markets generally, usually to decrease the worth of the Yen, though it refrains from doing it typically as a consequence of political considerations of its major buying and selling companions. The BoJ ultra-loose financial coverage between 2013 and 2024 prompted the Yen to depreciate towards its major foreign money friends as a consequence of an rising coverage divergence between the Financial institution of Japan and different major central banks. Extra just lately, the progressively unwinding of this ultra-loose coverage has given some assist to the Yen.
During the last decade, the BoJ’s stance of sticking to ultra-loose financial coverage has led to a widening coverage divergence with different central banks, notably with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Greenback towards the Japanese Yen. The BoJ resolution in 2024 to progressively abandon the ultra-loose coverage, coupled with interest-rate cuts in different main central banks, is narrowing this differential.
The Japanese Yen is usually seen as a safe-haven funding. Which means that in occasions of market stress, traders usually tend to put their cash within the Japanese foreign money as a consequence of its supposed reliability and stability. Turbulent occasions are prone to strengthen the Yen’s worth towards different currencies seen as extra dangerous to spend money on.
