The British pound sterling against the Japanese yen (GBP/JPY) came under pressure at the start of the week, falling back from the psychological level of 200.00. Although it successfully stood above this level last Friday and hit a new high since 2008, the current pullback does not have obvious bearish momentum, but rather reflects the market's cautious wait-and-see mood before the key central bank meeting.

In the UK, the Bank of England (BoE) is widely expected to maintain its benchmark interest rate at 4% at its policy meeting on Thursday, adopting a cautious wait-and-see approach. While rising inflation expectations have supported the British pound, the lack of further policy tightening signals has also limited its upward momentum.

An analyst at an international investment bank pointed out: "The Bank of England's inaction on interest rate policy will put pressure on the pound at a high level, but as long as inflationary pressure does not ease significantly, it will be difficult for monetary policy to turn to easing."

On the other hand, the Bank of Japan (BoJ) may delay raising interest rates amid domestic political uncertainty, leaving the yen with a lack of buying support. However, upward revisions to Japan's second-quarter GDP, coupled with a tight labor market and the first increase in real wages in seven months, support another rate hike this year.

This policy divergence from the Bank of England's more dovish stance has put some pressure on GBP/JPY.

A Tokyo research institute commented: "Market expectations for the Bank of Japan's interest rate hike are heating up. Although the political situation brings uncertainty, the gradual improvement of economic fundamentals provides medium-term support for the yen."

At the same time, the recent agreement reached between the United States and Japan has eliminated some uncertainties, and the improvement in the external environment has made the market more focused on the Bank of Japan's policy meeting on Friday.

In addition, UK employment data (Tuesday) and inflation data (Wednesday) will also have an impact on the short-term trend of the pound. In general, investors tend to remain cautious before major risk events.

Technically, the GBP/JPY pair is under pressure near the 200 level, with the short-term moving average maintaining an upward trend and the RSI declining after entering overbought territory, suggesting a cooling of the upward momentum. If the price falls back to the 198.50 support level and stabilizes, a rebound could resume, targeting above 201.50.

If it falls below 197.80, it may trigger a deeper correction and retest the 196.50 line. Overall, the exchange rate is still in a high-level fluctuation pattern.

Editor's Note: The GBP/JPY exchange rate is currently fluctuating at a high level, with policy divergence being the core factor influencing the exchange rate. The Bank of England's wait-and-see approach is limiting the pound's upward movement, while expectations of a Bank of Japan rate hike are supporting the yen, creating a short-term stalemate. The outcomes of the two central banks' policy meetings this week warrant attention.

If the BoE remains cautious and the BoJ confirms its rate hike path, GBP/JPY could come under pressure and fall back to support levels in the 198.50-197.80 range. If the BoE unexpectedly signals tightening or the BoJ slows down its rate hike pace, the pair could regain upward momentum, testing resistance at 201.50 and the 200-day moving average.

Overall, high-level fluctuations remain the main tone in the short term, and breaking through key support or resistance will determine the trend direction in the next stage.