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GBP/JPY Holds Firm Despite BoE Pause, Traders Eye BoJ Decision for Next Big Move
Traders' Opinions
Summary:
GBP/JPY held 0.2% higher near 200.70 as the BoE left rates at 4% with a cautious tone, while traders awaited the BoJ’s Friday decision
Buy
PENDINGGBPJPY
EXP
201.000
Entry Price
202.000
TP
199.800
SL
200.457 +0.210 +0.10%
--
Point
PENDING
199.800
SL
CLOSING
201.000
Entry Price
202.000
TP
The British pound corrected against the Japanese yen on Thursday, with the GBP/JPY pair trimming earlier gains but still managing to hold 0.2% higher near 200.70 in late European trade. The move came against a backdrop of diverging central bank policies, as the Bank of England (BoE) opted to keep interest rates unchanged while investors awaited fresh signals from the Bank of Japan (BoJ).
The BoE’s Monetary Policy Committee (MPC) voted 7-2 in favor of leaving the benchmark rate steady at 4.0%, following August’s 25 basis-point cut. The decision was widely expected, but the statement accompanying it offered little to those hoping for faster monetary easing. The central bank reiterated that it remains firmly committed to returning inflation to its 2% medium-term target, highlighting lingering concerns that price pressures could become embedded.
Two dovish members, Swati Dhingra and Alan Taylor, broke ranks once again, pushing for another 25 bps reduction. Their minority stance underscored a growing split within the MPC over how aggressively to cut rates as inflationary dynamics evolve. The bank also noted that it sees headline inflation peaking at 4% in September, before gradually easing, which provides some justification for a cautious stance.
For sterling, the decision brought volatility but no decisive trend shift. The pound initially popped higher but soon pared gains as traders digested the fact that while rate cuts are underway, the BoE will stick to its “gradual and careful” path of easing rather than rushing toward a looser stance.
On the other side of the pair, the yen continued to underperform its peers, reflecting both domestic uncertainty and global yield differentials. The Japanese currency weakened broadly against major counterparts, with only the New Zealand dollar faring worse on the day.
Markets are laser-focused on Friday’s Japanese consumer price index (CPI) release and the BoJ policy meeting. National CPI excluding fresh food is expected to have slowed to 2.7% year-on-year in August from July’s 3.1%. While the reading remains above the BoJ’s 2% target, the moderation provides some cover for policymakers to maintain their ultra-accommodative stance.
Consensus points to the BoJ holding rates steady at 0.5%. However, analysts caution that Governor Kazuo Ueda may leave the door open for a potential hike later this year, particularly if wage growth accelerates and price pressures prove sticky. That uncertainty keeps yen traders on edge, especially after the currency’s prolonged weakness in 2025.
Technical Analysis
From a technical perspective, GBP/JPY continues to display a bullish structure. The pair has been consolidating in recent weeks, but price action shows resilience above key support levels, suggesting that buyers remain firmly in control. Earlier this week, the pair tested and respected a significant support line, reinforcing the view that dips are being absorbed by demand.
The market recently broke and closed above a major daily resistance cluster, setting a higher high and confirming bullish momentum. Immediate resistance is seen near 201.20. A clean break above this level could trigger another leg higher, with momentum likely to carry the pair toward 202.00 in the coming sessions.
For now, the bias remains tilted to the upside as long as GBP/JPY holds above its recent lows. Traders are watching closely to see whether the pair can sustain momentum above 200.70 and mount a challenge at the next resistance zone.
TRADE RECOMMENDATION
BUY GBPJPY
ENTRY PRICE: 201.00
STOP LOSS: 199.80
TAKE PROFIT: 202.00
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