The Bank of Japan's signals of interest rate hikes intertwined with expectations of a rate cut in the UK, causing the GBP/JPY exchange rate to fluctuate and decline.
2026-02-26 14:52:04
The pound fell about 0.3% against the yen in early European trading on Thursday, trading around 211.30. This followed two consecutive days of strong gains, and the exchange rate experienced a technical pullback. The yen's strength was mainly driven by changes in policy expectations.
The Bank of Japan governor stated that the decision on whether to raise interest rates further will be based on economic and inflation data at future meetings, emphasizing that the rate hike process will continue if the probability of the economic and price outlook improving. This statement boosted market expectations for policy normalization.
However, Japanese Prime Minister Sanae Takaichi's cautious stance on further tightening policies has led the market to remain cautious about the timing of interest rate hikes. Regarding the pound, although the market widely expects the Bank of England to cut interest rates at its March meeting, this expectation has already been largely priced in.
Previously, Bank of England Monetary Policy Committee member Alan Taylor supported two to three interest rate cuts in the near future, citing rising employment risks and easing inflationary pressures.
From the daily chart, GBP/JPY has formed a phased upward structure after breaking through the 210 level. The moving average system is in a bullish arrangement, indicating that the medium-term trend is still strong. However, there is significant technical resistance in the 211.80-212.00 area. The pullback after the price touched this range is a normal correction after the rise.
The short-term support level is around 210.50. A break below this level could lead to a further test of the key support at 209.80. However, as long as the price remains above 209.80, the overall upward structure remains intact. The RSI indicator has slightly retreated from above 60, indicating a cooling of momentum, but it has not yet entered the oversold zone, suggesting that the bullish trend is slowing rather than reversing.
If the price subsequently stabilizes above 212.00, it could open up space towards 213.20 or even higher.
Editor's Note:
The GBP/JPY exchange rate is currently trading within a range dominated by policy dynamics. Expectations of a Bank of Japan rate hike are supporting the yen, while the Bank of England's rate-cutting cycle is limiting the pound's performance. Short-term trends suggest continued consolidation at higher levels; key focus will be on policy signals and changes in economic data.
The Bank of Japan governor stated that the decision on whether to raise interest rates further will be based on economic and inflation data at future meetings, emphasizing that the rate hike process will continue if the probability of the economic and price outlook improving. This statement boosted market expectations for policy normalization.
However, Japanese Prime Minister Sanae Takaichi's cautious stance on further tightening policies has led the market to remain cautious about the timing of interest rate hikes. Regarding the pound, although the market widely expects the Bank of England to cut interest rates at its March meeting, this expectation has already been largely priced in.
Previously, Bank of England Monetary Policy Committee member Alan Taylor supported two to three interest rate cuts in the near future, citing rising employment risks and easing inflationary pressures.
From the daily chart, GBP/JPY has formed a phased upward structure after breaking through the 210 level. The moving average system is in a bullish arrangement, indicating that the medium-term trend is still strong. However, there is significant technical resistance in the 211.80-212.00 area. The pullback after the price touched this range is a normal correction after the rise.
The short-term support level is around 210.50. A break below this level could lead to a further test of the key support at 209.80. However, as long as the price remains above 209.80, the overall upward structure remains intact. The RSI indicator has slightly retreated from above 60, indicating a cooling of momentum, but it has not yet entered the oversold zone, suggesting that the bullish trend is slowing rather than reversing.
If the price subsequently stabilizes above 212.00, it could open up space towards 213.20 or even higher.
Editor's Note:
The GBP/JPY exchange rate is currently trading within a range dominated by policy dynamics. Expectations of a Bank of Japan rate hike are supporting the yen, while the Bank of England's rate-cutting cycle is limiting the pound's performance. Short-term trends suggest continued consolidation at higher levels; key focus will be on policy signals and changes in economic data.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
