Insights 
VT 
The GBP/JPY cross experienced positive movement for the second consecutive day after a temporary drop below the 202.00 mark. It reached a fresh daily high but remained below the previous day’s peak as traders anticipated key UK macroeconomic data.
Uk Gdp Release
The UK’s economic schedule features the monthly GDP release, vital for assessing economic performance. A weak GDP, following recent poor labour market data, may strengthen forecasts of the Bank of England reducing interest rates further. This could pressure the British Pound, potentially leading to selling in the GBP/JPY pair.
Expectations for the Bank of Japan to maintain its policy path and possibly raise rates by year-end support the Japanese Yen. Domestic political uncertainties, however, may hinder the BoJ’s plans, preventing the Yen from appreciating further and aiding the GBP/JPY cross.
It is advisable to seek confirmation of continued buying momentum to conclude whether the corrective drop from the highest level since July 2024 has ended. On the contrary, bearish traders may wait for sustained weakness below the 201.50 level before committing to new positions for potential further declines.
The UK GDP, reported by the Office for National Statistics, is a key economic activity indicator. An increase suggests a stronger Pound, while a decline indicates weakness, affecting market sentiment. The next release is expected on 16 October 2025.
We are seeing some buying interest in GBP/JPY above the mid-202.00s on October 16th, but this follows the release of weak UK economic data. The monthly GDP figure for the UK came in at -0.1%, missing the consensus forecast of 0.1% growth and confirming a stagnating economy. This poor reading suggests the Bank of England will be more likely to cut interest rates further in the coming months.
Japanese Monetary Policy
This weak GDP print comes just after we saw the UK unemployment rate tick up to 4.5% earlier this week, its highest level in over a year. Given that the Bank of England already cut rates by 25 basis points in August 2025, traders should anticipate further monetary easing. This policy direction is fundamentally negative for the British Pound.
Meanwhile, the Bank of Japan is on a completely different path, having ended its negative interest rate policy back in 2024. Markets are now pricing in a greater than 60% chance of another rate hike by the end of this year to support the Yen. This policy divergence, with the BoE loosening while the BoJ tightens, should put downward pressure on the GBP/JPY cross.
For derivative traders, this creates an opportunity to position for a decline in the pair. Buying put options with strike prices below 202.00 could be a prudent way to gain bearish exposure while managing risk. The elevated uncertainty around Japanese politics means implied volatility may offer attractive entry points for such strategies.
However, confirmation is key, so we should watch for a sustained break below the 201.50 support level. A move below this point would signal that the corrective rally from earlier this month has ended and that a deeper slide is likely. Until that happens, the cross may remain choppy due to the political risks that could temporarily weaken the Yen.
