GBP\/JPY extended losses on Friday after suspected Japanese intervention strengthened the Yen, pulling the pair further from the 219.16 multi-year peak and leaving it around 213.75 near June lows. Reuters, citing a market source, said Japan likely sold US Dollars and bought Yen for as much as $58.97bn during Thursday\u2019s US session, a move that coincided with a drop of more than 500 pips. In a separate Reuters report, a source said the US Treasury told several banks it may intervene in the Yen market on Friday and asked them to stand ready for further action.<\/p>\n
The Bank of Japan kept its policy rate at 1.0% in an 8-1 vote and repeated that it would raise borrowing costs if growth and inflation align with forecasts. The Bank of England held the Bank Rate at 3.75% in a 6-3 vote, with three members favouring an immediate rise to 4.0%, and said policy could adjust if energy prices generate second-round effects. Technically, GBP\/JPY is below the 21-day, 50-day and 100-day SMAs; RSI sits in the mid-30s while MACD is negative and falling. Resistance is seen at 214.48, 215.65, 217.42 and 219.50, while support lies at 212.50 then 210.50.<\/p>\n
We advise derivative traders to brace for heightened volatility and adjust their GBP\/JPY exposures immediately following the suspected $59 billion Japanese intervention. This aggressive action mirrors Japan’s historic 9.8 trillion yen ($62.2 billion) intervention campaign in 2024, which successfully triggered multi-week trend reversals. Given that the cross has plunged below its 21-day, 50-day, and 100-day moving averages, we recommend purchasing near-term put options to ride this downward momentum.<\/p>\n
Technically, we should target the immediate support floor at 212.50, with a secondary target near 210.50 if the daily close remains weak. With the RSI sitting in the mid-30s and a negative MACD, the technical setup strongly favors bear put spreads to limit premium costs while capturing the slide. We suggest setting defensive stop-losses or closing short-term bearish positions if the pair rebounds and clears the 100-day Simple Moving Average at 214.48.<\/p>\n
However, we must remember that the fundamental yield gap still favors the Pound, with the Bank of England holding rates at 3.75% compared to the Bank of Japan\u2019s 1.0%. This interest-rate differential means the underlying carry trade remains fundamentally attractive once the intervention panic subsides. Consequently, we recommend structuring long-dated call options or bull risk reversals to position for an eventual recovery toward the 219.50 level in the coming months.<\/p>\n\n\n\n