VT 
GBP/JPY opened steady near 202.00, with price action showing minor softness that invited dip-buying interest. The short-term RSI eased lower, hinting at a potential rebound from 201.80. Technically, the pair remains bullish, with targets at 203.80 and 204.30 if support holds.
But beneath the surface, fundamentals are stirring.
Sluggish growth and rate cut speculation in the UK
The UK economic data painted a mixed picture. GDP growth for August was confirmed at just 0.1%, following stagnation in July. This modest expansion has raised concerns about the sustainability of the recovery, especially as inflation remains elevated. Analysts now expect the Bank of England to cut rates before year-end, potentially bringing the base rate to 3.75%. These expectations have capped upside for the sterling, even as GBP/JPY trades above its three-month average of 199.5.
Political uncertainty and risk-on sentiment in Japan
Meanwhile, the political landscape of Japan added volatility to the yen. Ongoing uncertainty surrounding leadership transitions and fiscal policy direction has weighed on JPY sentiment. Risk-on flows returned mid-October, lifting GBP/JPY above 202.00 as traders favored higher-yielding assets. The weakness in the yen was further compounded by the modest growth outlook of the country, with GDP expected to expand just 0.6% in 2025.
GBP/JPY technical analysis
GBP/JPY is consolidating within a bullish structure. A rebound from 201.80 could target 203.80 and 204.30. A close above 204.30 confirms bullish continuation. However, a break below 201.80 exposes 201.30 and 200.80, weakening the near-term setup.
- Support: 201.80 → 201.30 → 200.80
- Resistance: 203.80 → 204.30
- Bullish setup: Buy dips toward 201.80 with stops below 201.30. Target 203.80 and 204.30.
- Bearish setup: Short only on rejection near 204.30. Target between 202.50 and 201.80.
- Range play: Accumulate near support, scale out near resistance. Stay flexible within the 201.80 to 204.30 range.
Fundamentals add depth to the technical story
As UK growth slows and Japan navigates political uncertainty, GBP/JPY finds itself at a crossroads. The technical structure remains bullish, but macro developments could add volatility and nuance to the trend. Traders should stay nimble, monitor central bank commentary, and watch for rejection candles near resistance as the next chapter unfolds.
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