GBP/JPY Price Forecast: Bulls reclaim 50-day SMA, eye 213.00

The British Pound Sterling has climbed over 0.32% against the Japanese Yen, breaching the 50-day Simple Moving Average (SMA) of 210.77. This has created a potential opportunity for the pair to reach the 211.00 psychological level. Currently, GBP/JPY is nearing 211.00 after three days of minimal price fluctuations. It's worth mentioning that the cross-pair has climbed to fresh peaks for five consecutive days, indicating that buyers are gaining strength.

The Relative Strength Index (RSI) is also increasing, suggesting that buyers are currently in control. If GBP/JPY continues its upward trend above 211.00, the subsequent target would be the October 22 peak of 211.99. Beyond that, traders will be watching the 200-day SMA at 212.92 and the 100-day SMA at 213.19. For a bearish reversal, sellers will be looking for a drop below the October 28 swing low of 209.57, which could open the way to 208.01, the September 25 daily low.

The Japanese Yen is one of the world's most traded currencies, and its value is primarily influenced by the performance of the Japanese economy, particularly the Bank of Japan's policies, the disparity between Japanese and US bond yields, or traders' risk sentiments, among other factors. The Bank of Japan plays a significant role in currency markets, often intervening to decrease the Yen's value.

The BoJ has occasionally directly intervened in currency markets, mostly to lower the Yen's value, but usually refrains from doing so due to political concerns from its major trading partners. The Bank of Japan's ultra-loose monetary policy from 2013 to 2024 contributed to the Yen's depreciation against its main currency peers as there was an increasing policy divergence between the Bank of Japan and other central banks.

Recently, the gradual unwinding of this ultra-loose policy has provided some support to the Yen. Over the past ten years, the Bank of Japan's commitment to ultra-loose monetary policy has led to a widening policy divergence with other central banks, especially with the US Federal Reserve. This has supported a widening of the differential between the 10-year US and Japanese bonds, favoring the US Dollar against the Japanese Yen.

The BoJ's decision in 2024 to gradually abandon the ultra-loose policy, combined with interest-rate cuts in other major central banks, is narrowing this differential. The Japanese Yen is frequently considered a safe-haven investment, meaning that during periods of market stress, investors are more likely to invest in the Japanese currency because of its perceived reliability and stability.

Market analysts, news editors, and trading instructors with over 14 years of experience in FX, commodities, US equity indices, and global macro markets.