As the GBP/JPY chart shows, the pound has dropped below the 12 February low against the Japanese yen, marking its weakest level since the beginning of 2026. The pair last traded beneath the 207.500 mark in mid-December 2025.

→ The yen’s strength is supported by expectations that economic stimulus measures introduced by Prime Minister Sanae Takaichi, in coordination with the Bank of Japan, will underpin the national currency. Barclays forecasts further appreciation of the yen.

→ Sterling weakened today following reports that UK unemployment reached a five-year high in December, while wage growth slowed. This may reinforce arguments in favour of additional interest rate cuts by the Bank of England.

Technical Analysis of GBP/JPY

Long-term moving averages are turning lower, signalling potential structural shifts and possible capital reallocation after five years of an overall uptrend in GBP/JPY.

Price action is forming a well-defined descending channel. In this context:
→ the median line has switched from acting as support to serving as resistance (as highlighted by the thicker lines);
→ today, GBP/JPY is trading in the lower quarter of the channel, indicating continued bearish dominance.

It is worth noting that yesterday’s breakout above local resistance (marked by an arrow) proved to be false, triggering renewed downward momentum.

On the other hand, after dipping below the 12 February low near 207.560, the pair has started to rebound, raising the possibility of a mirrored move and a false bearish breakout.

Nevertheless, the outlook for bulls remains challenging. Even if they manage to push prices slightly higher, they may encounter resistance around 208.315 — a level where sellers previously demonstrated strength when breaking local support (shown in purple).

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