The GBP/JPY cross remains under selling pressure in early Thursday trading, hovering near the 195.55 mark, down approximately 0.20% intraday. Despite a modest rebound in the previous session, the British Pound (GBP) failed to sustain upward momentum and was met with renewed selling interest during the Asian trading session.
With market participants awaiting the release of the UK monthly GDP data, the pair remains confined within a narrow weekly range, with no decisive directional bias emerging yet. Aurudium’s brokers bring clarity to a complex subject with this in-depth write-up.
Safe-Haven Flows and Divergent Policy Expectations Drive Sentiment
One of the primary factors weighing on the GBP/JPY pair is the resurgence of safe-haven demand amid rising geopolitical tensions. Japanese Yen (JPY), a traditional safe-haven currency, has gained traction following the US President’s latest tariff threats, which rekindled concerns over global trade stability.
Additionally, increasing Middle East tensions and heightened risk aversion in equities have prompted investors to rotate capital into perceived safer assets like the yen.
In contrast, the British Pound continues to underperform as expectations mount for two interest rate cuts by the Bank of England (BoE) within 2025. These expectations stem from a weaker macroeconomic outlook in the UK, including subdued inflation pressures, stagnant wage growth, and mixed economic indicators.
Meanwhile, the Bank of Japan (BoJ) maintains a cautiously optimistic tone with increasing signals of policy normalization, a stark monetary policy divergence that adds downside pressure to the GBP/JPY exchange rate.
Technical Overview: Dip-Buyers May Reemerge on Key Support Levels
From a technical analysis perspective, the range-bound movement of GBP/JPY is best interpreted as a bullish consolidation phase following its recent bounce off the 200-day Simple Moving Average (SMA), currently placed near the 192.85–192.80 region. This SMA has historically served as a strong dynamic support, and the fact that prices rebounded from this level indicates continued underlying buying interest.
Momentum indicators such as the Relative Strength Index (RSI) and MACD on the daily chart remain in positive territory, reinforcing a non-overbought market structure. This suggests that while the cross is facing immediate headwinds, the broader bias remains neutral to mildly bullish unless a clear breakdown occurs below key support.
Short-term support is seen near the 195.00 psychological level, which coincides with this week’s swing low support in the 194.80–194.75 region. This zone is expected to attract dip-buyers, especially if the upcoming UK GDP print surprises to the upside.
However, a decisive break below 194.75 could trigger technical selling and lead to an accelerated decline towards the 194.00 round figure, and eventually to the 193.40 horizontal support, marking the next significant demand zone.
Resistance Zones: Bulls Face Obstacles Around 196.00 and Beyond
On the upside, immediate resistance is seen near the 195.85–196.00 zone, which acted as a supply barrier in recent sessions. A break and close above this zone would indicate a shift in intraday sentiment and might attract momentum buyers targeting the May swing high at 196.25–196.30.
A sustained move beyond this level could trigger a bullish breakout and propel GBP/JPY towards the 197.00 handle, a key psychological resistance and the highest level seen since January. Further extension of the upward move could expose the cross to the 197.40–197.50 intermediate resistance en route to a retest of the 198.00 mark, followed closely by the 198.25 year-to-date high.
In summary, the GBP/JPY pair currently trades with a bearish undertone, underpinned by strong yen demand and diverging BoJ-BoE policy expectations. Despite this, the lack of follow-through selling and the resilience at key support zones suggest that downside may be limited in the immediate term.
The technical landscape highlights critical areas such as 194.80–194.75 on the downside and 196.30 on the upside as pivotal zones for short-term direction. Until a breakout from the current consolidation range occurs, traders are likely to remain cautious, with dip-buying opportunities emerging on declines and profit-taking resistance on rallies.
With the UK GDP data imminent, a clearer directional bias may emerge, offering traders and investors a more definitive signal on whether the mid-195.00s mark a buy-the-dip opportunity or simply a pause in a broader downtrend.
