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The GBP/JPY currency pair, representing the exchange rate between the British Pound Sterling and the Japanese Yen, has exhibited notable fluctuations over the past few months. This report delves into the recent performance, underlying factors influencing these movements, and provides an outlook for the near future.

Recent Performance

As of July 3, 2025, the GBP/JPY exchange rate stands at approximately 197.35. Over the past six months, the pair has experienced significant volatility:

• Highs and Lows: The highest recorded rate in this period was 200.315 on June 30, 2025, while the lowest was 184.397 on April 9, 2025. (poundsterlinglive.com)

• Three-Month Trend: From April 8, 2025, when the rate was at 186.60, the GBP/JPY has appreciated by approximately 6.37%, reaching 198.4811 by June 28, 2025. (exchangerates.org.uk)

Influencing Factors

Several key factors have contributed to the recent movements in the GBP/JPY exchange rate:

Monetary Policy Divergence

The Bank of England (BoE) and the Bank of Japan (BoJ) have pursued divergent monetary policies:

• Bank of England: In response to persistent inflation above its 2% target between 2022 and 2024, the BoE implemented a series of rate hikes, raising the interest rate from 0.1% to 5.25% during this period. (blog.roboforex.com)

• Bank of Japan: Conversely, the BoJ has maintained an ultra-loose monetary policy with interest rates under 0% and engaged in unprecedented quantitative easing to combat deflationary pressures. (markets.com)

This divergence has made the Pound more attractive to investors seeking higher yields, thereby strengthening GBP against JPY.

Economic Indicators

• United Kingdom: The UK's Consumer Price Index (CPI) rose by 6.7% in October 2023 compared to the previous year. While inflation rates have been slowing, the BoE paused its interest rate hikes from August 2023, citing potential risks of economic slowdown due to tightened credit terms. (blog.roboforex.com)

• Japan: Japan's economy has faced challenges with low inflation and sluggish growth, prompting the BoJ to maintain its accommodative stance.

Geopolitical Events

Political stability and trade relations also play a role:

• UK Politics: Events such as Brexit negotiations have previously led to significant volatility in the GBP. (reelfinancial.com)

• Japan's Trade Position: As a major exporter, Japan's trade balance impacts the yen. A positive trade balance can support a stronger JPY, while a negative balance can weaken it. (reelfinancial.com)

Technical Analysis

Technical indicators provide insights into potential future movements:

• Moving Averages: As of June 28, 2025, GBP/JPY was trading above its 21-day EMA by 0.93%, above its 50-day EMA by 1.7%, and above its 100-day EMA by 2.36%. (exchangerates.org.uk)

• MACD Confirmation: The MACD line is above its signal line, indicating positive momentum and confirming an uptrend. (exchangerates.org.uk)

Forecasts

Analysts have provided the following forecasts for GBP/JPY:

• Short-Term: The exchange rate is expected to reach 186.3416 by September 2025, 183.0388 by December 2025, and 185.0314 by March 2026. (exchangerates.org.uk)

• Long-Term: Some forecasts suggest the pair will continue its rally, reaching 199.46 by the end of 2024 and 212.36 by the end of 2025. (blog.roboforex.com)

Conclusion

The GBP/JPY exchange rate has been influenced by a combination of monetary policy divergence, economic indicators, and geopolitical events. While technical analysis indicates a current uptrend, forecasts suggest potential fluctuations in the coming months. Investors should remain vigilant, considering both fundamental and technical factors when making decisions related to this currency pair.