Insights 
VT 
The GBP/JPY experienced a notable drop of nearly 200 pips, or 0.97%, falling below the 202.00 level for the first time since Friday. Trading at 201.94 as the Asian session begins, the pair is at its steepest daily decline in over a week.
Technical analysis suggests a possibility of further depreciation if GBP/JPY breaks below September’s high of 201.27. Key support levels include the 50-day SMA at 200.63 and 100-day SMA at 199.29, with October’s low at 197.49 acting as a further support.
Resistance After A Rebound
Should the GBP/JPY rebound above 202.00, resistance may form at 203.00 and weekly highs at 204.24. Meanwhile, the British Pound weakened this week against several major currencies, seeing a loss against the US Dollar and others.
Percentage changes depicted in a heat map show fluctuations among major currencies, with GBP facing notable declines against others. Each box provides the percentage change when comparing the base currency from the left column against the quote currency on the top row.
The article includes additional mentions of financial trends, decisions from the Fed and BoC, and US-China trade discussions, reflecting dynamic global market conditions.
Reacting To Retail Sales Figures
The sharp drop in GBP/JPY below the 202.00 level is a significant warning sign for us. This nearly 200-pip move broke the 20-day moving average, a key short-term support level that traders were watching closely. The immediate focus in the coming days should be on whether this level can be reclaimed or if it signals a deeper correction.
We believe this weakness in the Pound is partly a reaction to last week’s disappointing UK retail sales figures, which came in at -0.3% against an expected 0.2% growth. This has led to some repricing of Bank of England rate hike expectations for early 2026. This data adds a layer of fundamental pressure on top of the bearish technical picture.
On the other side of the pair, Bank of Japan officials continue to signal a cautious approach to any policy changes, which keeps the yen fundamentally weak over the long term. This divergence is why the broader uptrend remains technically in place despite the recent sell-off. We saw a similar dynamic during the high inflation period of 2023, where dips were often seen as buying opportunities.
Given the uncertainty, we are seeing traders use options to manage their risk around these key levels. The break below 202.43 has led to increased demand for put options with strike prices near the 50-day moving average at 200.63. This strategy allows for downside protection while waiting for a clearer trend to emerge.
Conversely, if the pair manages a sustained recovery above 202.00, we anticipate a shift in derivatives positioning. Traders would likely look at short-dated call options targeting the 203.00 psychological level. A firm move back into the previous range could trap recent sellers and fuel a quick rebound.
