BoJ Holds Steady as GBP/JPY Eyes Further Gains

The GBP/JPY breaks significant resistance at 196.50 after a long period of consolidation. It hit an intraday high of 196.85 and is currently trading around 196.47.  Intraday trend is bullish as long as the support of 195.35  holds.  

During June 2025, the Bank of Japan (BoJ) maintained a 17-year high by maintaining its short-term policy interest rate at 0.5%, marking the third month in succession. The BoJ is contemplating reducing the tapering rate from April 2026 to half due to market instability, even though there were no immediate modifications to JGB bond purchases. Despite food prices rising, Japan's core Consumer Price Index (CPI) inflation remains above the 2% target, prompting this decision. The governor, Ueda, has taken a cautious yet slightly aggressive approach, leaving the possibility of further rate increases if economic conditions are favorable. While the BoJ has been observing a decrease in global trade tensions, it is cautious about external risks, particularly those related to US trade policy and global economic uncertainties.

The GBP/JPY pair is trading above 34 and 55 and 200 EMA (Short-term) and 365 EMA (long-term) on the 4-hour chart, confirming a bullish trend.  Any violation below 195.35 indicates the intraday trend is weak. A dip to 194.70/194.30/193.70 is possible.  Immediate resistance is at 196.85, a breach above this level targets of 198/200. Any major uptrend is possible only above 196.50.

Market Indicators (4- hour)

CCI (50)- Bullish

Directional movement index - Bullish

Trading Strategy:  Buy on dips 
 It is good to buy on dips around 196 with a stop-loss (SL) of 195.35 for a target price (TP) of 198/200.