Expectations of increased fiscal spending by the new Japanese government put pressure on the yen, while the British pound rallied on strong economic data, pushing GBP/JPY to a two-week high.
2025-10-27 15:03:37
GBP/JPY continued to rise on Monday as the yen continued to weaken against the backdrop of a rebound in market risk appetite and rising fiscal expectations. The new Japanese Prime Minister plans to expand fiscal spending and increase the defense budget, causing investors to worry about Japan's fiscal pressure, thereby weakening the yen's appeal.
According to market research, some institutions have analyzed that Japan's additional budget may be accompanied by the issuance of more government bonds to provide financial support for fiscal stimulus.
Meanwhile, Asian market sentiment was boosted by easing trade concerns, further weakening the safe-haven bid for the yen. Investors tended to avoid pre-emptive bets as key central bank decisions approached. The Bank of Japan is expected to keep interest rates unchanged this week, with market focus on its subsequent guidance.
As for the British pound, the UK's September retail sales performance and the latest PMI data showed significant improvement, providing continued upward momentum for the pound. As expectations of the UK's economic resilience grow, funds are once again flowing back into British pound assets, boosting cross-currency markets.
On the daily chart, GBP/JPY maintains a strong structure. If it stabilizes above 204.00, the market is expected to move towards 205.33 (15-month high). Further breakthrough may open up space for 208.11.
However, if it falls below the 20-day moving average support at 201.50, the risk of a pullback will increase, with attention on the support areas of 200.68 and 198.87. The RSI returns above 60, indicating that bullish momentum still prevails.
Editor's opinion:
Against the backdrop of Japan's relatively loose fiscal outlook and sluggish monetary policy, the yen is struggling to find clear support, while UK economic data remains supportive of the British pound in the short term. If the Bank of Japan fails to signal substantial tightening this week, the GBP/JPY pair may see further upside. However, caution should be exercised regarding event risks and potential short-term pullbacks.
According to market research, some institutions have analyzed that Japan's additional budget may be accompanied by the issuance of more government bonds to provide financial support for fiscal stimulus.
Meanwhile, Asian market sentiment was boosted by easing trade concerns, further weakening the safe-haven bid for the yen. Investors tended to avoid pre-emptive bets as key central bank decisions approached. The Bank of Japan is expected to keep interest rates unchanged this week, with market focus on its subsequent guidance.
As for the British pound, the UK's September retail sales performance and the latest PMI data showed significant improvement, providing continued upward momentum for the pound. As expectations of the UK's economic resilience grow, funds are once again flowing back into British pound assets, boosting cross-currency markets.
On the daily chart, GBP/JPY maintains a strong structure. If it stabilizes above 204.00, the market is expected to move towards 205.33 (15-month high). Further breakthrough may open up space for 208.11.
However, if it falls below the 20-day moving average support at 201.50, the risk of a pullback will increase, with attention on the support areas of 200.68 and 198.87. The RSI returns above 60, indicating that bullish momentum still prevails.
Editor's opinion:
Against the backdrop of Japan's relatively loose fiscal outlook and sluggish monetary policy, the yen is struggling to find clear support, while UK economic data remains supportive of the British pound in the short term. If the Bank of Japan fails to signal substantial tightening this week, the GBP/JPY pair may see further upside. However, caution should be exercised regarding event risks and potential short-term pullbacks.
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