The GBP/JPY currency pair regained positive momentum at the start of a new trading week, climbing back closer to the 200.00 psychological mark during the Asian session. Spot prices remain near the over one-year high reached last week, reflecting a combination of supporting factors that continue to favor the British Pound (GBP) over the Japanese Yen (JPY). 

Robert Nowak, a broker from AureliusHub, will share his expertise by analyzing this matter in depth.

Market Sentiment Supports GBP/JPY

GBP/JPY attracted fresh buying interest on Monday as an upbeat market mood undermined the safe-haven appeal of the JPY amid lingering Bank of Japan (BoJ) uncertainty. Investor sentiment was further buoyed by geopolitical developments, particularly the high-stakes meeting between the US President and the Russian President in Alaska. 

Although the meeting yielded no immediate breakthrough, hopes for a resolution in the prolonged Ukraine conflict provided a modest risk-on tailwind, prompting traders to reduce exposure to traditionally defensive currencies like the JPY.

GBP Strengthened by UK GDP Data

The British Pound continued to benefit from the upbeat UK GDP print released last week, adding further support to GBP/JPY spot prices. Data released last Thursday showed the UK economy expanded at a quarterly rate of 0.3% in the three months to June 2025. 

Although this represented a deceleration from the 0.7% growth seen in the first quarter, it comfortably exceeded market forecasts of 0.1%, signaling a resilient domestic economy.

This stronger-than-expected GDP reading has had a direct impact on monetary policy expectations. Traders have now pushed back expectations for the next Bank of England (BoE) rate cut to November, underscoring the divergence between the BoE’s accommodative stance and market speculation around a potential rate hike by the BoJ later this year. This policy divergence continues to favor GBP/JPY bullish positioning, especially in light of recent gains.

Japanese Economic Data and BoJ Outlook

Despite the upbeat sentiment around the GBP, the JPY has faced headwinds due to mixed domestic signals. Japanese economic data released last Friday indicated that the economy expanded more than expected in Q2, showing resilience despite US tariff pressures. 

Additionally, an upward revision to the BoJ’s inflation forecast has fueled speculation that the central bank is likely to continue with its policy normalization path, even amidst domestic political uncertainty.

For traders, this suggests that while JPY strength may emerge intermittently, it is unlikely to exert sustained pressure on GBP/JPY without broader shifts in risk sentiment or monetary policy expectations. The current backdrop favors risk-on trades, with the GBP/JPY cross remaining well-positioned to test psychological resistance levels.

Technical Implications for GBP/JPY

From a technical perspective, GBP/JPY has regained positive traction following last week’s rally. The pair is currently hovering near the 200.00 level, which serves as a significant psychological barrier for traders. Sustained buying above this mark could open the door for further upside momentum, potentially targeting multi-year highs if supporting fundamentals persist.

Support levels to watch include 198.50 and 197.00, while resistance is expected around 200.50–201.00. The relative strength index (RSI) remains in the neutral-to-bullish range, suggesting that there is room for additional gains before the pair enters overbought territory.

Factors Driving GBP/JPY Forward

Several factors continue to drive GBP/JPY momentum:

• UK GDP resilience: The stronger-than-expected quarterly growth supports a bullish outlook for the GBP.
• BoE vs. BoJ divergence: Expectations for delayed BoE easing versus potential BoJ policy normalization enhance the appeal of GBP/JPY long positions.
• Risk-on sentiment: Geopolitical developments and investor appetite for riskier assets continue to weigh on the JPY.
• Technical traction: The pair’s proximity to the 200.00 mark draws interest from momentum traders, reinforcing recent gains.

Market Outlook

Looking ahead, traders should monitor UK economic releases, BoJ statements, and geopolitical developments for potential catalysts. While short-term volatility may emerge, the structural factors supporting GBP/JPY remain intact. 

A break above 200.00 could lead to renewed buying interest, reinforcing the uptrend established over the past two weeks. Conversely, any deterioration in risk sentiment or unexpected BoJ actions could temporarily test support levels around 198.50.

Conclusion

GBP/JPY has demonstrated strong upside momentum, reflecting a combination of economic fundamentals, monetary policy divergence, and risk-on market sentiment. 

With spot prices hovering near over one-year highs and the 200.00 psychological barrier in focus, the pair remains a key instrument for traders seeking exposure to GBP strength against a softening JPY, provided they remain mindful of geopolitical and economic developments that could influence the cross in the near term.