Yen Flows vs BoE: Why GBP Moves May Be Driven More by JPY Than Policy

The Bank of England's decision today will matter, but the Japanese Yen could end up having an even bigger influence.

GBP/USD is stuck between two big trendlines right now. The main one runs from the 2022 high to the projected highs in 2025, and just last week, the price bumped right up against it. But after President Trump made some comments and the dollar weakened, sellers lost their grip.

GBP/USD Weekly Chart

In the short term, resistance at 1.3768, a swing high from last September, has kept the lid on any rallies, along with that long-term trendline. If you look at the daily chart, there’s a bearish engulfing candle showing up. That usually hints at a change in momentum. If that signal holds through the close, the price can drop toward 1.3568 and maybe even down to 1.3500. Honestly, if you’re looking for stronger setups with the pound, GBP/JPY might have better opportunities right now.

GBP/USD Daily Chart

There is still a heavy one-sided position in USD/JPY. If that unwinds into USD weakness and Yen strength, those moves can spread across markets. That is why EUR/JPY and GBP/JPY sold off hard two weeks ago and why EUR/USD and GBP/USD rallied in Q3 2024 when carry trades began unwinding.

Now, ahead of the Bank of England decision, GBP/JPY is consolidating with key supports at 213.50, then 212.60, followed by a major zone at 211.42 to 211.59, which was prior resistance. Ideally, buyers defend this area before any move toward 210.00. A drop back to 210.00 would not automatically invalidate the bullish view, but it would likely signal strong Yen strength and require closer review.

GBP/JPY Daily Chart