empty
10.04.2025 12:59 AM
GBP/JPY: Down, Only Down

The GBP/JPY pair is in free fall. Just a week ago, the cross was approaching the 196.00 area, while on Wednesday, sellers pushed it to a new 7-month low at 184.38. In other words, the pair has fallen over 1,000 points in a week, driven by the pound's weakness and the yen's role as a safe-haven currency amid escalating tariff tensions. Demand for the yen remains elevated due to its protective status, and the current downtrend is likely to persist, considering the aggressive rhetoric and actions from Trump, China, and the European Union.

This image is no longer relevant

Note that this "southern marathon" in GBP/JPY began on April 2nd — the day President Trump unveiled his new tariff plan, which spooked investors and triggered turbulence across global financial markets. What makes the current situation unique is that the beneficiary this time is not the U.S. dollar — which usually acts as a safe haven in such scenarios — but the yen, which has become the go-to currency for hedging against rising U.S. recession risks.

Therefore, GBP/JPY's directional bias is closely tied to the trajectory of the trade war. Should Trump begin rolling back tariffs and signing bilateral deals, the yen would weaken, allowing GBP/JPY buyers to regain control. However, if the trade war continues to escalate—as it currently does—the yen will likely maintain its dominance, and GBP/JPY will keep updating new multi-month lows.

For example, on Wednesday, traders reacted to the latest escalation in the tariff battle between the U.S. and China. Initially, the U.S. announced 54% tariffs on all Chinese imports (already a record high), to which Beijing responded with 34% tariffs on U.S. goods. Trump immediately retaliated with another 50%, bringing the total U.S. tariff level on Chinese imports to 104%.

But the "tariff battle" didn't end there: on Wednesday, China announced it would impose an additional 50% tariff on U.S. imports starting on Thursday (April 10), bringing its total to 84%.

This confirms that the trade war between the world's two largest economies is intensifying, and the prospect of a deal is becoming increasingly remote.

At the same time, China's Ministry of Commerce signaled it is ready to raise the stakes if the U.S. continues to escalate. According to a ministry spokesperson, "China has the resolve and the means to counteract firmly and fight to the end."

The trade war with the European Union is also heating up, with EU exports now subject to 20% U.S. tariffs. President Trump rejected the EU's proposal to fully eliminate tariffs on industrial goods, calling it "insufficient." In response, Brussels plans to impose retaliatory tariffs on a wide range of U.S. products — reportedly worth €21 billion.

Against this backdrop, stock markets are once again in decline. Tokyo's Nikkei closed down 3.9%, Hong Kong's Hang Seng lost 4.3%, London's FTSE 100 dropped over 2.3%, and the European Stoxx 600 fell 2.6%, among others. At the same time, safe-haven assets — gold, the Swiss franc, and the yen — are in high demand.

Thus, despite the prior 1,000-point drop, the current fundamental backdrop favors continued declines in GBP/JPY. The bearish trend remains intact, and unless Donald Trump unexpectedly announces a "tariff amnesty" (which is unlikely), the yen will likely remain in demand as a safe-haven asset.

From a technical standpoint, GBP/JPY is moving within a descending channel, confirming the strong bearish trend. This is supported by the Ichimoku indicator on the daily and weekly charts, where a bearish "Parade of Lines" signal has formed, confirming the dominance of short positions. On higher timeframes, the price is either at the lower boundary or between the middle and lower lines of the Bollinger Bands indicator, which is currently expanded and below all Ichimoku lines (except on the monthly timeframe).

The first downside target is the Kijun-sen line on the monthly chart, which aligns with the 182.50 level. The primary target lies lower, at 179.00, the lower line of the Bollinger Bands on the MN timeframe. It would be reasonable to lock in profits and adopt a wait-and-see approach in this price area.

Irina Manzenko,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

What to Pay Attention to on May 21? A Breakdown of Fundamental Events for Beginners

Very few macroeconomic events are scheduled for Wednesday. However, the UK inflation report holds significant importance for the market, or rather, used to . As we can see, traders continue

Paolo Greco 06:45 2025-05-21 UTC+2

The Fed Maintains a Wait-and-See Approach

The market expects active measures from the U.S. central bank, while Donald Trump keeps demanding that Jerome Powell cut interest rates. It's worth noting that Powell cannot make such decisions

Chin Zhao 00:41 2025-05-21 UTC+2

The Dollar Regains Its Spirit

As the CFTC report showed, investors are still not very impressed that the US and China have managed to reduce trade tensions and take a pause for negotiations

Kuvat Raharjo 00:26 2025-05-21 UTC+2

EUR/USD: Weak Dollar Meets Indecisive Euro

The EUR/USD pair has consolidated above the 1.1200 level, reflecting the overall weakening of the U.S. dollar. The "bearish attack" we witnessed last week ended in failure. EUR/USD sellers were

Irina Manzenko 19:35 2025-05-20 UTC+2

Euro Exhausts Bullish Momentum

Inflation in the eurozone remained unchanged in April compared to March, fully in line with forecasts—2.2% year-over-year for the headline index, and 2.7% year-over-year for the core index. This inflation

Kuvat Raharjo 19:16 2025-05-20 UTC+2

AUD/NZD. Analysis and Forecast

The AUD/NZD pair is declining, drawing seller interest following the Reserve Bank of Australia's (RBA) decision to lower the official cash rate (OCR) by 25 basis points to 3.85%. Although

Irina Yanina 19:09 2025-05-20 UTC+2

USD/CAD. Current Market Situation Amid Mixed Fundamental Background

The pair is under pressure, trading within the familiar range established earlier. At the moment, the fundamental background is mixed. Crude oil prices are struggling to attract significant buyers, especially

Irina Yanina 19:07 2025-05-20 UTC+2

DXY. The U.S. Dollar Continues to Struggle

Today, the U.S. Dollar Index (DXY), which tracks the dollar's performance against a basket of currencies, is trading near its weekly low, continuing to fight for relevance. The lack

Irina Yanina 19:04 2025-05-20 UTC+2

The Dollar Is Back to Its Old Ways

Markets thrive on conspiracy theories more than anything else. Investors continue to believe that Donald Trump wants a weak dollar to boost the competitiveness of American manufacturers. It's no surprise

Marek Petkovich 18:54 2025-05-20 UTC+2

AUD/USD. RBA Delivers Dovish Scenario, but It's Too Early to Rush into Selling

The Reserve Bank of Australia (RBA) followed the most expected scenario at its May meeting, cutting the interest rate by 25 basis points. However, AUD/USD sellers remain vulnerable

Irina Manzenko 11:44 2025-05-20 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.