GBP/JPY Price Forecast: Pound dives below 208.00 following rejection at 209.00

The British Pound (GBP) experienced a decline against the Japanese Yen (JPY) on Monday, reaching fresh two-week lows at 207.70 after being rejected at the 209.00 mark during the Asian session. This marked a more than 1% drop over the past two trading days and brought the pair close to oversold levels on short-term charts. At the time of the Bank of Japan's (BoJ) minutes release, the pair showed minimal reaction.

While the BoJ increased interest rates in September, two dissenting members left investors questioning the Bank's capacity to further tighten monetary policy. In the UK, the Bank of England shifted to a more hawkish stance, with Governor Bailey and Deputy Governor Clare Lombardelli hinting at potential rate hikes. However, HSBC analysts noted that "weak UK labour demand and sluggish private sector momentum could weigh on the GBP in the near term."

Additionally, the approaching budget update on October 28 may exert further pressure on the pound. GBP/JPY trades at 208.00, maintaining the current bearish structure, with momentum indicators in the 4-hour chart remaining negative. The Relative Strength Index (14) is just above oversold levels, while the Moving Average Convergence Divergence (MACD) histogram shows widening red bars, indicating that upward attempts are likely to encounter resistance.

Bears have breached the September low trendline at 208.10 and are now targeting the support area around 207.80. On the upside, initial resistance lies at 209.00, which has previously capped bullish attempts on Monday. A break above this level would expose horizontal resistance near 210.10 (September 23-24 highs) ahead of the September 22 high at 210.90.