The unexpected decline in UK GDP in May triggered a sell-off of the pound, and the yen was under pressure due to trade risks. GBP/JPY fell back to 199.20
2025-07-11 14:22:40
A number of UK economic data were worse than expected, with both services and manufacturing slowing down
Data showed that the service industry index (3-month moving average) recorded 0.4% in May, down from 0.6% in the previous month. Monthly industrial output and manufacturing output fell by 0.9% and 1% respectively, both lower than market expectations, indicating that the UK real economy is facing synchronous pressure in multiple dimensions.
At the same time, the Bank of England (BoE) released its mid-year financial stability report on Wednesday, also pointing out structural risks in financial markets.
"The risk of sharp corrections in asset prices is high, asset allocations may shift suddenly, and correlations between traditional assets may fail." - According to market surveys, the Bank of England's Financial Policy Committee (FPC) report pointed out
The committee also highlighted geopolitical conflict, fragmentation of global trade and financial markets, and sovereign debt stress as key systemic threats currently facing the UK.
The yen is also under pressure as trade tensions and policy uncertainty simmer
Despite the weakening of the pound, the Japanese yen (JPY) also faced strong selling pressure, which provided some support for GBP/JPY. Currently, the US decision to impose a 25% high tariff on Japanese exports has been confirmed this week, especially the deadlock in negotiations on the protection of agricultural products (such as rice), which has increased the pressure on Japan's exports.
Japan's producer price index (PPI) released on Thursday showed that inflation has begun to decline, further weakening market expectations for the Bank of Japan to raise interest rates this year.
"Japan is not facing a price shock, but a compound economic slowdown with weaker exports and inflation," said Kenji Yamazaki, a senior economist at the University of Tokyo's Center for Economic Research, according to market research.
Against the backdrop of expanding external risks, the safe-haven function of the Japanese yen is facing structural weakening.
Technically, GBP/JPY is under pressure below the 200 mark, and bullish momentum is slowing down. If the short-term support of 198.50 is lost, further correction space will be opened, seeking support in the 197.80 and 197.00 areas. On the contrary, if it can regain its footing above 200.00, it may be expected to test the year's high of 201.50.
In terms of indicators, the RSI indicator fell back to the neutral range, and the MACD formed a slight death cross, indicating that the risk of short-term adjustments has increased.
"If the 199 integer mark cannot be maintained, the bears may dominate the market rhythm in the short term." - According to market research, Francesco Hale, a foreign exchange strategist in London, commented
Editor's opinion:
GBP/JPY is currently showing a structural oscillation pattern of "weaker days as Britain gets weaker", and its short-term trend will be mainly driven by macro data and external risk expectations. The UK economy has shrunk for two consecutive months, which has intensified market concerns. In addition, the Bank of England has warned of volatility risks in the financial market, which has put the pound under greater pressure; however, the yen has been continuously sold off due to the decline in inflation and trade difficulties, which has increased the possibility of GBP/JPY maintaining high volatility.
Data showed that the service industry index (3-month moving average) recorded 0.4% in May, down from 0.6% in the previous month. Monthly industrial output and manufacturing output fell by 0.9% and 1% respectively, both lower than market expectations, indicating that the UK real economy is facing synchronous pressure in multiple dimensions.
At the same time, the Bank of England (BoE) released its mid-year financial stability report on Wednesday, also pointing out structural risks in financial markets.
"The risk of sharp corrections in asset prices is high, asset allocations may shift suddenly, and correlations between traditional assets may fail." - According to market surveys, the Bank of England's Financial Policy Committee (FPC) report pointed out
The committee also highlighted geopolitical conflict, fragmentation of global trade and financial markets, and sovereign debt stress as key systemic threats currently facing the UK.
The yen is also under pressure as trade tensions and policy uncertainty simmer
Despite the weakening of the pound, the Japanese yen (JPY) also faced strong selling pressure, which provided some support for GBP/JPY. Currently, the US decision to impose a 25% high tariff on Japanese exports has been confirmed this week, especially the deadlock in negotiations on the protection of agricultural products (such as rice), which has increased the pressure on Japan's exports.
Japan's producer price index (PPI) released on Thursday showed that inflation has begun to decline, further weakening market expectations for the Bank of Japan to raise interest rates this year.
"Japan is not facing a price shock, but a compound economic slowdown with weaker exports and inflation," said Kenji Yamazaki, a senior economist at the University of Tokyo's Center for Economic Research, according to market research.
Against the backdrop of expanding external risks, the safe-haven function of the Japanese yen is facing structural weakening.
Technically, GBP/JPY is under pressure below the 200 mark, and bullish momentum is slowing down. If the short-term support of 198.50 is lost, further correction space will be opened, seeking support in the 197.80 and 197.00 areas. On the contrary, if it can regain its footing above 200.00, it may be expected to test the year's high of 201.50.
In terms of indicators, the RSI indicator fell back to the neutral range, and the MACD formed a slight death cross, indicating that the risk of short-term adjustments has increased.
"If the 199 integer mark cannot be maintained, the bears may dominate the market rhythm in the short term." - According to market research, Francesco Hale, a foreign exchange strategist in London, commented
Editor's opinion:
GBP/JPY is currently showing a structural oscillation pattern of "weaker days as Britain gets weaker", and its short-term trend will be mainly driven by macro data and external risk expectations. The UK economy has shrunk for two consecutive months, which has intensified market concerns. In addition, the Bank of England has warned of volatility risks in the financial market, which has put the pound under greater pressure; however, the yen has been continuously sold off due to the decline in inflation and trade difficulties, which has increased the possibility of GBP/JPY maintaining high volatility.
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