• GBP/JPY falls as the Pound Sterling weakens after disappointing UK Gross Domestic Product data.
• The UK economy grew 0.1% QoQ in Q4 2025, below the 0.2% forecast.
• The Japanese Yen strengthens after renewed intervention warnings from Tokyo.

GBP/JPY remained in the negative territory after paring daily losses, trading around 208.60 during the early European hours on Thursday. However, the currency cross ticks lower as the Pound Sterling (GBP) remains under pressure after the release of disappointing United Kingdom (UK) Gross Domestic Product (GDP) data.

The United Kingdom (UK) economy expanded 0.1% quarter-over-quarter in the three months to December 2025, matching the 0.1% growth recorded in the third quarter (Q3) but falling short of the 0.2% market forecast.

On a year-over-year (YoY) basis, UK GDP rose 1.0% in Q4 2025, below expectations of 1.2% and down from 1.2% in Q3 (revised from 1.3%). Meanwhile, monthly UK GDP increased 0.1% in December, compared with 0.2% in November (revised from 0.3%), in line with market consensus. UK data also showed Industrial Production and Manufacturing Production fell 0.9% and 0.5%, respectively, in December, both missing expectations.

The GBP/JPY cross faces challenges as the Japanese Yen (JPY) strengthens amid renewed verbal intervention from Japanese authorities and optimism on Japanese Prime Minister Sanae Takaichi’s expansionary fiscal agenda.

Japan’s Vice Finance Minister for International Affairs and top foreign exchange official, Atsushi Mimura, said authorities are monitoring market developments “with a high sense of urgency” and remain alert to renewed JPY volatility. Finance Minister Satsuki Katayama also reaffirmed that the government would respond to currency moves in line with the US-Japan joint statement.

Analysts point to signs of improved fiscal discipline and a more market-friendly stance, encouraging investors to increase exposure to Japanese equities on expectations that stimulus will benefit households and businesses.