GBP/JPY Price Forecast: Softens to near 213.00, traders await UK jobs data

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The GBP/JPY cross trades in negative territory near 213.15 during the early European session on Tuesday. The stronger-than-expected Japan Gross Domestic Product (GDP) report for the first quarter (Q1) provides some support to the Japanese Yen (JPY) and acts as a headwind for the cross.

GBP/JPY declines to around 213.15 in Tuesday’s early European session.
The positive outlook of the cross prevails, but further consolidation cannot be ruled out in near term.
The first upside barrier emerges at 213.85; the initial support level to watch is 211.55.

The attention will shift to the UK employment data, which is due later on Tuesday. The Unemployment Rate is expected to remain unchanged at 4.9% in March, while Claimant Count Change is projected to show an increase of 27.3 in April. Any signs of improvement in the UK labor market could lift the British Pound (GBP) against the JPY in the near term.

Technical Analysis:

In the daily chart, GBP/JPY holds above the 100-day Exponential Moving Average (EMA) and the lower Bollinger Band, keeping the broader uptrend underpinned despite the recent pullback from the highs. Price now sits beneath the Bollinger mid-line, while the Relative Strength Index (RSI) around 48 hints at neutral momentum after earlier overbought readings cooled.

On the topside, initial resistance is located at the Bollinger middle band near 213.85, with the upper band at 216.45 acting as the next bullish objective if buying pressure resumes. On the downside, immediate support is seen at the 100-day EMA around 211.55, followed by the lower Bollinger Band at 211.22; a sustained break below this cluster would weaken the current bullish bias and expose a deeper correction.

(The technical analysis of this story was written with the help of an AI tool.)

Japanese Yen FAQs

What key factors drive the Japanese Yen?

The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.

How do the decisions of the Bank of Japan impact the Japanese Yen?

One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.

How does the differential between Japanese and US bond yields impact the Japanese Yen?

Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.

How does broader risk sentiment impact the Japanese Yen?

The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.