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GBP/JPY Price Forecast: Buyers defend 100-day SMA as momentum weakens

  • GBP/JPY rebounds modestly after earlier sell-off likely triggered by suspected intervention by Japanese authorities.
  • Technically, the cross holds a bullish bias above key moving averages, though weakening momentum signals fading upside strength.
  • The 100-day SMA offers immediate support, while 213.50 acts as the first upside hurdle.

GBP/JPY stages a modest rebound on Friday after coming under selling pressure earlier in the day amid suspected intervention by Tokyo for a second straight day to curb excessive weakness in the Japanese Yen (JPY). At the time of writing, the cross is trading around 213.42, recovering from an intraday low of 211.81 and poised to end the week in negative territory for the first time in four weeks.

However, there has been no official confirmation of intervention by Japanese authorities so far, though officials issued a “final” warning on Thursday after USD/JPY briefly moved past the 160 level, a threshold that has previously triggered action. This move spilled across Yen crosses, with GBP/JPY posting a sharp pullback from a multi-year high near 216.60 to around 210.45 the previous day.

Although underlying fundamentals, including wide interest rate differentials between the Bank of Japan (BoJ) and other major central banks, continue to weigh on the Yen, the latest leg lower suggests near-term downside pressure on the cross as momentum indicators turn negative.

Technical Analysis:

In the daily chart, GBP/JPY holds a constructive bias while consolidating above its key trend filters. The 100-day Simple Moving Average (SMA) and the 200-day SMA sit comfortably below the spot, suggesting underlying demand despite the recent pullback.

However, momentum has cooled, with the Relative Strength Index easing toward the mid-40s and the Moving Average Convergence Divergence (MACD) slipping into negative territory, hinting that upside attempts may lack follow-through in the very near term.

On the topside, immediate resistance is located at the horizontal barrier near 214.50, where a daily close above would reopen the path toward the recent peak of 216.60 and signal renewed bullish impulse.

On the downside, initial support is provided by the 100-day SMA at 211.89, with a break there exposing deeper retracement toward the 200-day SMA at 206.74, where buyers would be expected to defend the broader uptrend.

Japanese Yen Price Today

The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the New Zealand Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD-0.19%-0.14%0.02%-0.19%-0.06%0.12%-0.11%
EUR0.19%0.04%0.18%-0.01%0.15%0.30%0.08%
GBP0.14%-0.04%0.15%-0.04%0.09%0.26%0.06%
JPY-0.02%-0.18%-0.15%-0.20%-0.08%0.07%-0.12%
CAD0.19%0.01%0.04%0.20%0.12%0.29%0.10%
AUD0.06%-0.15%-0.09%0.08%-0.12%0.16%-0.02%
NZD-0.12%-0.30%-0.26%-0.07%-0.29%-0.16%-0.20%
CHF0.11%-0.08%-0.06%0.12%-0.10%0.02%0.20%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).

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Pound Sterling edges down, remains broadly firm amid hawkish BoE prospects

  • The Pound Sterling ticks lower but is broadly upbeat amid expectations of a BoE interest rate hike in the near term.
  • BoE’s Bailey calls for a possible interest rate hike to avoid second-round effects of inflation from emerging.
  • The US Dollar trades with caution ahead of the US ISM Manufacturing PMI data for April.

The Pound Sterling (GBP) ticks lower against its major currency peers, trading marginally down to near 1.3590 against the US Dollar (USD) during the European trading session on Friday. However, the British currency is broadly upbeat amid the speculation that the Bank of England (BoE) will deliver an interest rate hike in upcoming policy meetings.

Pound Sterling Price Today

The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the weakest against the Japanese Yen.

USDEURGBPJPYCADAUDNZDCHF
USD-0.02%0.06%-0.05%-0.03%0.20%0.32%-0.02%
EUR0.02%0.07%-0.04%-0.03%0.22%0.32%-0.01%
GBP-0.06%-0.07%-0.11%-0.09%0.12%0.27%-0.06%
JPY0.05%0.04%0.11%0.00%0.23%0.32%0.02%
CAD0.03%0.03%0.09%-0.01%0.22%0.34%0.03%
AUD-0.20%-0.22%-0.12%-0.23%-0.22%0.11%-0.21%
NZD-0.32%-0.32%-0.27%-0.32%-0.34%-0.11%-0.31%
CHF0.02%0.00%0.06%-0.02%-0.03%0.21%0.31%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

Hawkish BoE prospects are backed by remarks from BoE Governor Andrew Bailey, in a press conference after the policy meeting on Thursday, pointing to hiking interest rates before elevated energy prices-driven inflation starts showing second-round effects.

“A prolonged spike in energy prices could lead to a higher bank rate,” BoE’s Bailey said, adding, “It would be a mistake to wait to see the second-round effects before acting because then it would be too late,” Reuters reported.

In the policy meeting, the BoE left interest rates unchanged at 3.75%, as expected, for the third meeting in a row. Out of the nine members-led Monetary Policy Committee (MPC), BoE Chief Economist Huw Pill dissented from the decision to hold interest rates, and voted in favor of an interest rate hike.

The United Kingdom (UK) Consumer Price Index (CPI) data for March showed that the headline inflation accelerated to 3.3% Year-on-Year (YoY).

Meanwhile, the US Dollar (USD) trades cautiously even as the Federal Reserve (Fed) is expected to hold interest rates at their current levels for the entire year. According to the CME FedWatch tool, the odds of the Fed keeping interest rates unchanged in the current range of 3.50%-3.75% by the year end is 83.6%.

In Friday’s session, investors will focus on the US ISM Manufacturing Purchasing Managers’ Index (PMI) data for April, which will be published at 14:00 GMT.

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EUR/GBP flat lines above 0.8600 as ECB and BoE keep interest rates unchanged

  • EUR/GBP steadies near 0.8625 in Friday’s early European session. 
  • The European Central Bank kept interest rates on hold at its April meeting. 
  • The Bank of England left interest rates unchanged at 3.75% on Thursday.  

The EUR/GBP cross holds steady around 0.8625 during the early European session on Friday. The European Central Bank (ECB) and the Bank of England (BoE) warned they may need to raise interest rates in the coming months, as central banks grapple with the energy shock triggered by the war in the Middle East.

The ECB governing council opted to hold its benchmark deposit facility rate at 2% on Thursday. According to the statement, the central bank said the inflation outlook was largely unchanged. “The upside risks to inflation and the downside risks to growth have intensified.”

ECB President Christine Lagarde said the central bank’s governing council had discussed a rate rise this month “at length and in depth” before voting for a hold. However, policymakers would closely monitor the situation and take a data-dependent and meeting-by-meeting approach to determining their monetary policy stance.  

On the UK’s front, the Bank of England (BoE) held interest rates at 3.75% as uncertainty over the Iran war continues. BoE Governor Andrew Bailey said if price pressures triggered by the conflict proved to be severe, a “forceful tightening” would be required.

Bailey on Thursday played down fears of near-term rate hikes but added: “We’ll continue to monitor the situation and its impact on the UK economy very closely.”

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GBP/JPY jumps to near 214.00 as Yen gives back some Japan intervention-led gains

  • GBP/JPY rises to near 214.00 as the Japanese Yen surrenders some gains driven by Japan’s intervention.
  • Tokyo CPI ex. Fresh Food growth cooled down to 1.5% YoY in April.
  • BoE’s Bailey clarifies that the central bank will act if it finds there might be second-round effects of inflation.

The GBP/JPY pair is up 0.35% at around 214.00 during the Asian trading session on Friday. The pair trades higher as the Japanese Yen (JPY) surrenders a majority of its Thursday’s gains, which were driven by Japan’s intervention in forex markets to counter one-way speculative moves against the domestic currency.

Japanese Yen Price Today

The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the weakest against the US Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD0.02%0.03%0.35%0.00%0.13%0.22%0.03%
EUR-0.02%0.00%0.31%-0.04%0.11%0.18%0.00%
GBP-0.03%-0.00%0.30%-0.03%0.09%0.17%0.02%
JPY-0.35%-0.31%-0.30%-0.33%-0.22%-0.16%-0.31%
CAD-0.01%0.04%0.03%0.33%0.11%0.20%0.04%
AUD-0.13%-0.11%-0.09%0.22%-0.11%0.08%-0.06%
NZD-0.22%-0.18%-0.17%0.16%-0.20%-0.08%-0.15%
CHF-0.03%-0.00%-0.02%0.31%-0.04%0.06%0.15%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).

According to a report from Reuters, Japan intervened to prop up the JPY against the US Dollar (USD) on Thursday, its first official currency action in nearly two years.

Japan Finance Minister (FM) Satsuki Katayama also said on Thursday that they are moving closer to taking decisive action in the foreign exchange markets.

Meanwhile, Tokyo’s Consumer Price Index (CPI) ex. Fresh Food data for April has come in lower than expected. The underlying inflation growth cooled down to 1.5% Year-on-Year (YoY) from 1.7% in March, while it was expected to arrive higher at 1.8%.

In the Asian trade, the Pound Sterling (GBP) trades higher against its major currency peers, except the Canadian Dollar (CAD), as the Bank of England (BoE) has opened the room for an interest rate hike if the energy supply shock continues to persist.

On Thursday, the BoE left interest rates unchanged at 3.75%, as expected, and Governor Andrew Bailey warned that second-round effects of energy crisis-led inflation could arise, but the central bank would not wait and act early. “It would be a mistake to wait to see the second-round effects before acting because then it would be too late,” Bailey said in the press conference, Reuters reported.

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BoE: June hike seen as one and done – ING

ING’s James Smith notes that the Bank of England (BoE) kept rates at 3.75% in April but is moving closer to tightening as the Middle East crisis persists. ING now expects a single June rate hike, with UK inflation seen peaking slightly above 4% this year. ING remains sceptical about a persistent inflation surge.

ING shifts to a June hike call

“One month ago, Bank of England Governor Andrew Bailey told us markets were getting ahead of themselves on rate hike pricing. That feels like the underlying message from the April decision, which keeps interest rates at 3.75%. But it’s also clear the Bank is inching closer to a rate hike in June.”

“Governor Bailey characterised the decision not to cut, which is what the Bank was likely to have done pre-war, as in effect a decision to tighten policy.”

“That’s why, after today’s decision, we’re now edging towards a hike in June. It’s certainly not guaranteed, but that’s now narrowly our base case, having previously felt rates would stay on hold through this year.”

“Whether that’s followed by one or even two extra hikes, as markets are currently pricing, we’re less convinced right now. It’s clear the majority of the committee are still sceptical about this turning into a persistent bout of inflation, akin to what we saw in 2022. We strongly agree.”

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BoE’s Bailey speaks on interest rate outlook, takes media questions

Bank of England (BoE) Governor Andrew Bailey is addressing a press conference and responding to media questions, explaining the reasons behind the central bank’s decision to hold the benchmark policy rate at 3.75% in an 8-1 vote split following the April monetary policy meeting.

Key takeaways from Bailey’s Press Conference

Monetary policy cannot prevent higher global energy prices from affecting uk economy and inflation.

Where we go from here will depend on size and duration of shock to energy prices.

We now project inflation will rise to a little over 3.5% by end of year.

Initial indirect effects of inflation are likely to be largest for food prices.

The longer the conflict in Middle East lasts, the worse the impact will become.

Size of second round effects is uncertain and will take time to build.

Monetary policy faces a difficult judgement call as cannot wait for conclusive evidence on 2nd round effects.

Under scenarios A and B, necessary interest rate response is largely achieved by not cutting rates as was expected in Feb and without further rate increase.

Prolonged spike in energy prices could lead to higher Bank Rate.

There is a good deal of space available to accommodate inflation pressures by not cutting rates as had been previously expected.

Sheer volatility of energy prices makes it impossible to put probabilities on different scenarios.

It would be a mistake to wait for second round effects before acting, that would be too late.

It will take time before we get a good read on pay as most annual settlements have already been agreed.

I think energy price profile of scenario B is more plausible than scenario A.

We do not hear that rapid return to pre-conflict energy supply conditions is likely

It is an active hold today, not a passive one.

Developing story, please refresh the page for updates.

This section below was published at 11:00 GMT to cover the Bank of England’s policy announcements and the initial market reaction.

The Bank of England (BoE) announced on Thursday that it left the benchmark policy rate unchanged at 3.75%, as widely expected, following the conclusion of the April monetary policy meeting.

The vote showed the expected split on the Monetary Policy Committee (MPC), with one member favoring a 25-basis point (bps) rate hike.

Takeaways from BoE Monetary Policy Summary

BoE Chief Economist Huw Pill voted to increase rates by 0.25 percentage points

Bailey says “reasonable” to hold rates at 3.75% given uk economic situation and uncertainty in Middle East.

CPI likely to be higher this year as effect of higher energy prices passes through.

Bailey says our job is to make sure that inflation gets back to 2% after initial impact of war on energy prices has passed.

BoE says there is a risk of material second-round effects from inflation on wage- and price-setting, policy would need to lean against this.

BoE says weaker economy and labour market and tighter financial conditions will help reduce inflation over time.

BoE Monetary Policy Report highlights

BoE has not updated central economic forecasts, gives new forecasts based on three scenarios for energy prices and inflation persistence.

BoE forecasts 2026 CPI averaging 3.3%-4.5% under different scenarios (Feb central projection: 2.2%).

BoE forecasts 2027 CPI averaging 2.6%-4.8% under different scenarios (Feb central projection: 1.9%).

BoE forecasts 2028 CPI averaging 1.5%-2.9% under different scenarios (Feb central projection: 2.0%).

BoE forecasts for 2027 GDP growth 0.8%-1.0% under different scenarios (Feb central projection 1.5%).

BoE forecasts for 2026 GDP growth 0.7%-0.8% under different scenarios (Feb central projection 0.9%).

BoE says most inflationary scenario “was likely to warrant a forceful tightening of monetary policy”.

BoE projections show inflation peaking at 6.2% in Q1 2027 under most inflationary scenario if rates only rise as markets expect.

Market reaction to BoE policy announcements

The Pound Sterling shows little reaction to the BoE policy announcements, with GBP/USD up 0.34% on the day at 1.3515, as of writing.

Pound Sterling Price Today

The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the US Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD-0.24%-0.31%-1.90%-0.22%-0.52%-0.59%-0.69%
EUR0.24%-0.03%-1.68%0.02%-0.27%-0.32%-0.42%
GBP0.31%0.03%-1.66%0.06%-0.22%-0.27%-0.39%
JPY1.90%1.68%1.66%1.70%1.41%1.29%1.20%
CAD0.22%-0.02%-0.06%-1.70%-0.31%-0.39%-0.48%
AUD0.52%0.27%0.22%-1.41%0.31%-0.05%-0.15%
NZD0.59%0.32%0.27%-1.29%0.39%0.05%-0.10%
CHF0.69%0.42%0.39%-1.20%0.48%0.15%0.10%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

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GBP faces pressure after BoE leaves interest rates unchanged at 3.75%, as expected

  • The Pound Sterling comes under pressure against its peers after the BoE’s interest rate decision.
  • The BoE maintains the status quo, leaving interest rates unchanged at 3.75%.
  • On Wednesday, the Fed held interest rates steady in the range of 3.50%-3.75%.

The Pound Sterling (GBP) faces selling pressure, prima facie, after the Bank of England’s (BoE) monetary policy announcement. As expected, the BoE has left interest rates unchanged at 3.75%, with an 8-1 majority. This is the third straight meeting that the BoE has maintained the status quo.

BoE Chief Economist Huw Pill was the one Monetary Policy Committee (MPC) member who dissented from the hold decision and voted for an interest rate hike. Pill was expected to advocate an interest rate hike, as he stated in an event in the middle of the month, that interest rates should be raised for inflation to return to the central bank’s 2% target.

The BoE needs to make decisions that give “the most insurance” against a repeat of the 2022 inflation shock, Pill argued, warning against a “wait and see approach,” Bloomberg reported.

Meanwhile, the US Dollar (USD) faces intense selling despite growing concerns over the Strait of Hormuz outlook and a hawkish Federal Reserve (Fed) hold.

United States (US) President Donald Trump stated on late Wednesday that Washington’s naval blockade of Iranian sea ports will continue until Iran gives up its nuclear ambitions.

On Wednesday, the Fed left interest rates unchanged at 3.50%-3.75%, however, three members of the rate-setting committee dissented the decision and advocated for a move away from the monetary easing bias.

Going forward, investors will focus on the US preliminary Gross Domestic Product (GDP) data, which will be published at 12:30 GMT. On an annualized basis, the US GDP growth is expected to have remained higher at 2.3% against the previous reading of 0.5%.

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Bank of England – Preview

H is for hawk The Bank of England will announce its latest policy decision at midday on Thursday. The market is expecting no change in rates from the Bank, and we expect an 8-1 vote split, with one of the noted hawks at the bank voting to increase rates.

The backdrop to this meeting is a deeply uncertain global outlook and the threat of a bigger inflation spike after another surge in the oil price, which has risen to a fresh war-time high on Thursday morning to more than $123 per barrel for Brent, as the blockade in the Strait of Hormuz looks like it will be in place for the long term and as Donald Trump mulls ending the ceasefire with Iran. We expect the BOE to remain as calm and composed as possible considering the backdrop, and to stress the uncertain outlook, however, now that the oil price is rising again and oil supply is likely to remain constrained for the long term, the BOE may find it hard to avoid straying into hawkish territory as it balances growth risks with inflation concerns.

We expect the Bank will stress the need to watch for second round inflation effects, for example wage growth. So far, the survey data does not suggest that firms are likely to raise wages, and the labor market is still soft, even if the unemployment rate fell below 5% in the 3 months to February. The latest DMP survey shows that expectations for wage growth this year are unchanged at 3.5%. The Bank may also address the increase in inflation expectations, which rose by 2.1% in March, according to the latest Citi-YouGov survey. This suggests that consumers are concerned about a 2022-style energy price shock, even if the Bank has been keen to stress that the economic backdrop is different this time.

Assessing the chance of a hawkish shock at the BOE

A hawkish shock would be a larger number of MPC members voting for a rate hike, especially since signals coming from the March data have been resilient so far. If we get a 6-3 split, then this could open the door to a June rate hike. That might sound hasty, however, an early hike could nip in the bud any threat of second round inflation effects, especially if the blockade of the Strait of Hormuz lasts for the long term and the oil price stays in triple figures.

What will the BOE do next

Although we do not expect any forward guidance from the BOE at today’s meeting, the market is convinced that the next move from the BOE is a rate hike. There is roughly an 84% chance of two rate hikes from the BOE this year, and the market expects rates to rise to 4.25% to combat the threat of rising inflation caused by the energy price spike. The market is expecting the BOE to signal that rates will remain higher for longer, and for now, UK inflation is expected to peak at 4% this year.

Fed’s hawkish tilt

Today’s BOE meeting follows Wednesday night’s Fed meeting. The Fed did not change policy, but it is worth noting that its policy decision was the most divided since 1992. On the back of the Fed meeting, traders now see a rate hike as more likely than a rate cut for this year, following the Fed’s hawkish hold on Jerome Powell’s last meeting as chair. There is now an 11% chance of a hike from the Fed this year, up from 5% prior to the meeting. The Fed did not change the language used in its statement at this meeting, which suggests that cuts could still be on the cards for US interest rates. However, Powell suggested that this language could be adapted in future if elevated oil prices persist and three Fed governors opposed the current language used in the statement.

The market reacted to the hawkish tone at the Fed. The Dow Jones slumped 250 points, the dollar ticked higher and US stock index futures are also pointing to losses for the S&P 500 on Thursday. We think that the market reaction to the BOE meeting is likely to be mostly felt in the bond market. UK 2-year yields rose by 8 bps on Wednesday, and yields are higher by 26bps in the past month. The 2-year yield is now trading at 4.55%, so a lot of BOE hawkishness is already priced into UK bonds. We think that the oil price is more important for the direction of UK yields and sentiment towards UK assets more generally. UK stocks have slipped behind their US counterparts in recent weeks, and until there is a rotation out of US tech stocks and into defense names like BAE Systems and Rolls Royce, we could see the UK index may continue to struggle.

Chart 1: FTSE 100 and the S&P 500

Source: XTB