Insights 
VT 
Technical Analysis And Historic Context
The GBP/JPY pair increased by 0.19% on Thursday, closing at 203.30, marking a 0.55% rise for the week. As Friday’s Asian session commenced, it traded at 203.36, showing little change.
Technically, the pair dipped to a nine-day low of 200.68 on 17 October but has since recovered. The RSI indicates a bullish trend, suggesting potential resistance at 203.50 and 204.00, with a break above 204.00 potentially leading to a yearly high of 205.32. Support levels are seen at 203.00, 202.00, and the 20-day SMA at 201.87.
This week, the British Pound was most robust against the Japanese Yen. The heat map illustrates percentage changes among major currencies. For instance, the GBP showed a 0.43% change against the JPY. Christian Borjon Valencia authored this analysis, a retail trader since 2010, who began his career focusing on technical analysis.
With GBP/JPY trading around 203.36, the bullish momentum suggested by the Relative Strength Index is a key signal for us. We see this as a potential entry point for strategies designed to profit from upward movement. The pair’s recent recovery from the 200.68 low on October 17 shows that buying interest is returning.
For the coming weeks, we could consider buying call options with a strike price near the 204.00 resistance level. A sustained break above this psychological barrier would open the door to retesting the yearly high of 205.32, which was set earlier this month on October 8. This makes short-term bullish plays particularly attractive right now.
Policy Influence And Interest Rate Dynamics
This upward pressure on the Pound is reinforced by the Bank of England’s current policy stance. With UK inflation for September 2025 coming in slightly above target at 3.1%, the central bank is expected to keep interest rates elevated to manage price pressures. This hawkish outlook continues to provide fundamental support for Sterling.
Conversely, the Japanese Yen remains weak due to the Bank of Japan’s persistent dovish policy. Recent economic data shows Japan’s core inflation is still struggling to hold above the 2% target, giving the BoJ no reason to tighten its monetary policy. This growing interest rate differential between the UK and Japan is the main engine driving this currency pair higher.
This situation feels similar to the wide policy divergences we traded through back in 2022 and 2023, which created very strong trends. We are watching the 203.00 level closely as our first line of support. A break below this would signal that the bullish momentum is fading and would prompt us to hedge with put options.
