GBP/JPY Price Forecast: Surges to weekly high as Pound strengthens

GBP/JPY Price Forecast: Technical outlook

The technical picture shows the GBP/JPY remains upward biased, even though after reaching a yearly peak of 214.29 on January 13 retreated towards the 211.00 mark. Since then, the pair consolidated within the 211.00 – 213.00 area, before buyers had cleared the top of the range attempting to challenge the current yearly high.

From a momentum standpoint, buyers have the upper hand as shown by the Relative Strength index (RSI), which is approaching the overbought territory.

If GBP/JPY clears 214.00, the next resistance would be 214.29 ahead of testing 214.50. A breach of the latter will expose 215.00.

For a bearish reversal, the GBP/JPY needs to drop below the 20-day SMA at 212.04, followed by the break of January 19 with a swing low of 210.71. This would be the first signal that bears are gathering steam, yet the next cycle low is seen at 206.77, December 16, 2025, daily low.

GBP/JPY Price Chart – Daily

Pound Sterling FAQs

What is the Pound Sterling?

The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).

How do the decisions of the Bank of England impact on the Pound Sterling?

The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.

How does economic data influence the value of the Pound?

Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.

How does the Trade Balance impact the Pound?

Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.