GBP/JPY on Shaky Ground: Can the Yen's Strength End the Bull Run?

The GBP/JPY  lost its shine on the strong yen. It hit an intraday low of 188.79 and is currently trading around 189.38. Intraday trend is bearish as long as resistance support 190 holds.

 BoJ's Hawkish Stance: Rate Hikes Fuel Yen Strength

The Bank of Japan (BoJ) is letting interest rates rise, with Japanese Government Bond (JGB) yields higher and a more appreciated currency. The BoJ increased its policy interest rate to 0.5%, a 17-year high, in January 2025 as a result of the increase in inflation and wage growth, with its core inflation target of 2.7% for fiscal year 2024.

Market analysts anticipate increased rates of 2025 with solid economic prospects. The increase in rates has pushed JGB yields that tend to appreciate the Yen as they attract foreign investors.

BoJ Optimistic Outlook for Recovery

Despite economic uncertainty in the world, BoJ is positive about the recovery of Japan's economy and continues to stick to its implementation of monetary policy for price stability. BoJ is reacting but prudent in its policy towards controlling inflation, encouraging growth in the economy, and producing a beneficial effect on the Yen and JGB yields

Technical Analysis of GBP/JPY

The GBP/JPY pair is trading below  34 and 55 EMA (Short-term) and 200 EMA (long-term) on the 4-hour chart, confirming a bearish trend. Immediate resistance is at 190; a breach above this level targets 190.64/191/192. Any close above 192 in the 4-hour chart confirms further bullishness. Downside support is at 188.70 with additional levels at 188/187.25/185.

Market Indicators

CCI (50)- Bearish

Directional movement index - Bearish

 It is recommended to sell on rallies around 190 with a stop-loss at 191 for a TP of 188.