Fundamental Analysis:
Between May 26 and 29, 2025, the British pound strengthened against the Japanese yen, driven by dynamics in the sovereign debt market. In Japan, a 40-year government bond auction saw the weakest demand in nearly a year, pushing yields to decade highs. This surge reflects concerns over Japan's fiscal sustainability, as its debt exceeds 260% of GDP. The Bank of Japan's ambiguous stance on future rate hikes, coupled with bond market pressures, has diminished the yen's appeal as a safe-haven currency.
Conversely, UK 30-year bonds surpassed 5% yields following a lackluster auction. However, this rise is attributed to persistent inflation expectations and a comparatively stable macroeconomic outlook. The perception of the UK's economic resilience, contrasted with Japan's fiscal tensions, has bolstered the pound, reinforcing the upward trend in the GBP/JPY pair. This movement appears to be a market response to structural differences in risk perception and fiscal stability between the two nations.
Technical Analysis:
GBPJPY | Daily
- Supply Zone (Sell): 197.00
- Demand Zone (Buy): 193.19
The GBP/JPY pair exhibits a bullish reversal structure, breaking above the multi-month descending channel and surpassing March's daily resistance. A concentration of buying volume around 193.19 supports this trend. Confirmation of this trend change requires a new high above 196.41.
The last validated daily support is at 190.32, with 191.90 becoming the key reference support once a higher high towards 197.00 is achieved.
Bullish Scenario:
Consider buying above 195.00, targeting 196.00, 197.00, 198.00, and 199.00 over several days.
Bearish Scenario:
Intraday selling below 195.60, targeting 195.10, 195.00, and the demand zone around 194.70, before resuming upward movement.
