Key Moments
- GBP/JPY recovered from an intraday pullback to the 214.35-214.30 area and moved higher for a fourth consecutive session.
- Middle East-related economic risks and energy supply concerns pressured the Japanese Yen and lent support to the cross.
- Prospects of a BoJ rate hike and reduced BoE tightening expectations, alongside UK political uncertainty, limited GBP/JPY upside below 215.00.
GBP/JPY Supported by Dip-Buying and Softer JPY Tone
The GBP/JPY pair turned higher for the fourth session in a row on Thursday, after buyers emerged near the 214.35-214.30 zone and halted a retreat from the weekly peak. The British Pound found backing from a mildly weaker US Dollar, while persistent negative sentiment toward the Japanese Yen continued to underpin the cross.
Market participants focused on a mix of macro and geopolitical drivers that have been weighing on the Yen. These dynamics, together with technical buying interest on dips, kept the currency pair well bid, although still constrained below a key psychological threshold.
Middle East Conflict and Energy Disruptions Pressure the Yen
Investors remained concerned that Japan’s economy will stay under pressure due to the ongoing conflict in the Middle East and continued disruptions to energy flows through the Strait of Hormuz. According to the article, Iran announced the closure of this strategic shipping route after the United States launched a new round of strikes within the country under orders from US President Donald Trump.
These developments have been a central factor behind the Yen’s relative underperformance, reducing its typical safe-haven appeal and providing support for GBP/JPY. The perceived risk to energy supplies has added another layer of uncertainty for an economy reliant on such imports, further undermining the Japanese currency.
Intervention Risk and Policy Divergence Cap GBP/JPY Gains
Despite the Yen’s weakness, speculation that Japanese authorities could intervene again to shore up the domestic currency discouraged traders from taking overly aggressive short positions. This intervention risk helped temper the downside in JPY and contributed to keeping GBP/JPY below the 215.00 psychological level and beneath Wednesday’s weekly high.
Expectations around monetary policy also played a role in restraining the cross. Market participants appeared confident that the Bank of Japan will raise interest rates at its next policy meeting on June 15-16. In contrast, the outlook for further tightening by the Bank of England has turned more cautious.
Traders have been dialing back expectations for additional aggressive BoE rate hikes following softer UK consumer inflation data and an unexpected increase in the UK Unemployment Rate. At the same time, political uncertainty in the United Kingdom, including challenges to Prime Minister Keir Starmer’s leadership, posed a potential headwind for the Pound. These factors together argued for caution before positioning for further sustained gains in GBP/JPY.
Japanese Yen Performance Over the Last 30 Days
The table below details the percentage changes of the Japanese Yen against major currencies over the last 30 days, as well as how those currencies have moved against each other. The Japanese Yen was strongest relative to the Australian Dollar during this period.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 2.01% | 1.69% | 2.15% | 2.05% | 3.49% | 2.91% | 2.66% | |
| EUR | -2.01% | -0.34% | 0.04% | 0.02% | 1.44% | 0.88% | 0.62% | |
| GBP | -1.69% | 0.34% | 0.41% | 0.36% | 1.79% | 1.25% | 0.97% | |
| JPY | -2.15% | -0.04% | -0.41% | -0.07% | 1.34% | 0.65% | 0.56% | |
| CAD | -2.05% | -0.02% | -0.36% | 0.07% | 1.36% | 0.72% | 0.60% | |
| AUD | -3.49% | -1.44% | -1.79% | -1.34% | -1.36% | -0.51% | -0.79% | |
| NZD | -2.91% | -0.88% | -1.25% | -0.65% | -0.72% | 0.51% | -0.30% | |
| CHF | -2.66% | -0.62% | -0.97% | -0.56% | -0.60% | 0.79% | 0.30% |
The heat map framework can be read by selecting the base currency from the left-hand column and the quote currency from the top row. For instance, choosing the Japanese Yen as the base currency and moving horizontally to the US Dollar cell shows the percentage change for JPY (base)/USD (quote).
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