GBP/JPY rises amidst unique policy divergence
The GBP/JPY cross pair rose during the trading session on Wednesday, December 17, 2025, drawing a bullish candlestick, extending the previous bullish. The price formed a high of 208.381, a low of 207.056, and a close of 208.362.
The current strengthening of the GBP against the JPY occurs amid a unique market situation due to opposing policy divergences, which could trigger high volatility in the GBP/JPY.
On the GBP side, the market currently expects the Bank of England (BoE) to cut interest rates by 25 bps to 3.75% from 4.00%. This expectation has been fueled by the latest UK economic data, which shows weak GDP in October and rising unemployment. Subdued inflation provides room for the BoE to cut ahead of Christmas. If the rate cut is confirmed with a pessimistic tone regarding the UK economy, the GBP could potentially weaken.
At the same time, the Bank of Japan (BoJ) is expected to raise interest rates, indicating a more hawkish stance, as recent solid Japanese economic data reinforces expectations that the BoJ intends to normalize its monetary policy. Market sentiment toward the yen has gained additional strength as it is the only major currency with an upward trend in interest rates, while other countries, such as the UK and the US, have begun to cut rates. A BoJ rate hike could trigger a strengthening of the JPY, which would put downward pressure on the GBP/JPY pair.
Recent UK economic data shows that UK CPI fell to 3.2% in November, lower than market expectations, reinforcing expectations that the BoE will cut interest rates, which will be released today or soon.
UK economic output contracted, and employment indicators weakened, with the unemployment rate rising. This reinforces dovish pressure on the GBP. Consequently, the fundamental bias is bearish, as expectations of a BoE rate cut typically weaken the GBP against other major currencies.
The JPY has fundamentally weakened in recent years due to low Japanese yields, but expectations of a BoJ interest rate hike could provide temporary technical support. As a result of this policy direction, sentiment is slightly bullish on the JPY if the market interprets the interest rate hike as a meaningful policy change, potentially strengthening it against the GBP.
The GBP tends to be under pressure due to expectations of interest rate cuts and weak economic data. The JPY has the potential to gain strength from expectations of a BoJ interest rate hike. In the short term, overall fundamentals are bearish for GBP/JPY, barring any global market risks or unexpected news that supports the GBP.
Although not directly impacting GBP/JPY, traders will also be watching US economic data today, including unemployment claims and inflation.
GBPJPY price range forecast: lower support is around 206,600 - 207,200, and upper resistance is around 208,500 - 209,100. If the Bank of England (BoE) cuts interest rates as expected, selling pressure could break through support. Conversely, if the BoJ does not raise interest rates as expected, the JPY could weaken again.
The GBP/JPY cross pair rose during the trading session on Wednesday, December 17, 2025, drawing a bullish candlestick, extending the previous bullish. The price formed a high of 208.381, a low of 207.056, and a close of 208.362.
The current strengthening of the GBP against the JPY occurs amid a unique market situation due to opposing policy divergences, which could trigger high volatility in the GBP/JPY.
On the GBP side, the market currently expects the Bank of England (BoE) to cut interest rates by 25 bps to 3.75% from 4.00%. This expectation has been fueled by the latest UK economic data, which shows weak GDP in October and rising unemployment. Subdued inflation provides room for the BoE to cut ahead of Christmas. If the rate cut is confirmed with a pessimistic tone regarding the UK economy, the GBP could potentially weaken.
At the same time, the Bank of Japan (BoJ) is expected to raise interest rates, indicating a more hawkish stance, as recent solid Japanese economic data reinforces expectations that the BoJ intends to normalize its monetary policy. Market sentiment toward the yen has gained additional strength as it is the only major currency with an upward trend in interest rates, while other countries, such as the UK and the US, have begun to cut rates. A BoJ rate hike could trigger a strengthening of the JPY, which would put downward pressure on the GBP/JPY pair.
Recent UK economic data shows that UK CPI fell to 3.2% in November, lower than market expectations, reinforcing expectations that the BoE will cut interest rates, which will be released today or soon.
UK economic output contracted, and employment indicators weakened, with the unemployment rate rising. This reinforces dovish pressure on the GBP. Consequently, the fundamental bias is bearish, as expectations of a BoE rate cut typically weaken the GBP against other major currencies.
The JPY has fundamentally weakened in recent years due to low Japanese yields, but expectations of a BoJ interest rate hike could provide temporary technical support. As a result of this policy direction, sentiment is slightly bullish on the JPY if the market interprets the interest rate hike as a meaningful policy change, potentially strengthening it against the GBP.
The GBP tends to be under pressure due to expectations of interest rate cuts and weak economic data. The JPY has the potential to gain strength from expectations of a BoJ interest rate hike. In the short term, overall fundamentals are bearish for GBP/JPY, barring any global market risks or unexpected news that supports the GBP.
Although not directly impacting GBP/JPY, traders will also be watching US economic data today, including unemployment claims and inflation.
GBPJPY price range forecast: lower support is around 206,600 - 207,200, and upper resistance is around 208,500 - 209,100. If the Bank of England (BoE) cuts interest rates as expected, selling pressure could break through support. Conversely, if the BoJ does not raise interest rates as expected, the JPY could weaken again.
I trade at FXOpen