Key Moments
- GBP/JPY climbs from its 100-day Simple Moving Average and closes a modest weekly bearish gap, but remains just below the mid-213.00s.
- The British Pound is supported by reduced political uncertainty and the Bank of England’s indication that further rate hikes may be warranted if inflation stays elevated.
- Lingering fears of additional Japanese FX intervention and policy caution from the Bank of Japan limit further GBP/JPY gains despite overall yen weakness.
GBP/JPY Holds Firmer After Testing Key Moving Average
The GBP/JPY pair finds renewed buying interest near its 100-day Simple Moving Average support on Monday, helping the cross erase a modest weekly bearish gap at the open. After the initial recovery, however, upside momentum fades, with spot levels stabilizing just below the mid-213.00s in early European trading.
Sterling Backed by Lower Political Risk and BoE’s Hawkish Tone
Support for the British Pound is reinforced by a reduction in political concerns surrounding Prime Minister Keir Starmer’s standing, following earlier heavy losses for the Labour Party in English local elections and parliamentary contests in Scotland and Wales. Market participants also point to the Bank of England’s communication that additional interest rate hikes could be appropriate if inflation remains persistent, which underpins both GBP and the GBP/JPY cross.
Yen Softness Tempered by Intervention Jitters
The Japanese Yen remains on the back foot, with its weaker performance linked to economic risks associated with renewed US-Iran tensions and ongoing disruptions to energy flows through the Strait of Hormuz. Even so, speculation that Japanese authorities may again intervene to support the currency discourages aggressive bearish positioning in JPY and acts as a headwind for a more pronounced rise in GBP/JPY.
Reports from last week indicated that officials stepped into the foreign exchange market during holidays in early May, following yen-supportive operations conducted on April 30. In addition, Japan’s top currency diplomat, Atsushi Mimura, stated that Japan faces no constraints on the frequency of its interventions in currency markets and maintains daily communication with US counterparts. These signals, combined with a hawkish stance from the Bank of Japan, encourage caution among GBP/JPY bulls.
Japanese Yen Performance Against Major Currencies
The following table summarizes the current percentage changes of the Japanese Yen relative to major currencies. On the day, the Yen has shown the greatest strength against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.20% | 0.32% | 0.25% | 0.04% | 0.11% | 0.35% | 0.21% | |
| EUR | -0.20% | 0.12% | 0.00% | -0.18% | -0.08% | 0.15% | 0.00% | |
| GBP | -0.32% | -0.12% | -0.11% | -0.30% | -0.19% | 0.04% | -0.12% | |
| JPY | -0.25% | 0.00% | 0.11% | -0.19% | -0.08% | 0.13% | -0.02% | |
| CAD | -0.04% | 0.18% | 0.30% | 0.19% | 0.11% | 0.28% | 0.16% | |
| AUD | -0.11% | 0.08% | 0.19% | 0.08% | -0.11% | 0.22% | 0.08% | |
| NZD | -0.35% | -0.15% | -0.04% | -0.13% | -0.28% | -0.22% | -0.13% | |
| CHF | -0.21% | -0.00% | 0.12% | 0.02% | -0.16% | -0.08% | 0.13% |
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