GBP/JPY is experiencing a decline as demand for safe-haven assets rises due to the July 9 tariff deadline set by President Trump. The British Pound is facing pressure from political issues within the Labour Party, which is limiting its gains. Currently, GBP/JPY trades below the 10-day Simple Moving Average of 197.61. It’s facing resistance while finding support at the key level of 197.00. If it drops below this support, it might continue to correct towards the important Fibonacci level at 195.41.

UK Political Scene and Yen Influence

The UK’s political situation is troubled by internal conflicts over budget strategies, putting pressure on the Pound. In contrast, the Yen is mainly affected by the Bank of Japan’s loose monetary policy, alongside ongoing US trade tensions, complicating matters further. The GBP/JPY pair remains above its 200-day SMA, with long-term support at 193.55. However, resistance around 198.00 makes it hard for prices to rise. The Relative Strength Index shows neutral momentum, suggesting the potential for both upward and downward moves. Market sentiment impacts currency trends, with “risk-off” moments favoring safe-haven currencies like the Yen, Swiss Franc, and US Dollar. Investors usually shift to these assets seeking stability during economic uncertainty. At this moment, the GBP/JPY pair is caught between weak domestic sentiment and global uncertainty. The recent dip below the 10-day moving average while struggling to stay above 197.00 signals a warning for the near term. When a pair trades below a short-term moving average and approaches a key psychological level, it often indicates a lack of confidence in the currency, at least for now. If the 197.00 level breaks, we could see a sharper drop towards 195.41, aligning with a previously tested Fibonacci level. Buyers might step in there, but if current pressures continue, demand may stay weak. The broader political situation in Britain isn’t helping. Budget conflicts usually have effects, especially when they reveal deeper party divisions. For markets, budget concerns reflect a lack of clear direction. Without agreement, currency traders often pull back, waiting for a clearer path.

Japan and Safe Haven Dynamics

In Japan, despite a loose monetary policy keeping bond yields low, the Yen remains closely tied to market sentiment. As uncertainty grows, money tends to flow into safer assets. Right now, the Yen benefits from the upcoming July 9 tariff deadline. Even the mere threat of tariffs can sway market sentiment, affecting risk appetite. This often leads to shifts into currencies seen as safer. From a technical standpoint, the long-term 200-day moving average is intact below current prices, resting above 193.55. This level has acted as support in the past, but relying on it can be risky. When sentiment changes—especially due to politics or global economic pressures—prices can swiftly break through perceived support levels due to volatility. The Relative Strength Index remains in the middle range, indicating neither an overbought nor an oversold market. This suggests that while prices are currently stable, they haven’t yet committed to a direction. Sideways price action can be frustrating, especially amid political disunity and policy differences. When safe-haven buying increases—whether from trade tensions or general caution—the impact is quick. Currencies like the Yen, Dollar, or Franc tend to rise as investment moves away from riskier assets. This is particularly important in pairs with more volatile currencies. Timing becomes crucial, especially around major news events, as such environments do not reward complacency. In terms of price levels, resistance near 198.00 is strong. If prices can close decisively above that mark, momentum traders may reconsider and enter long positions. Until then, traders should focus on current conditions rather than relying on historical trends. Market participants should remain adaptable, rather than predictive, in the upcoming sessions. Opportunities will likely arise from intraday moves, especially around key trade policy or budget announcements. By monitoring clear levels—such as 197.00 below and 198.00 above—traders can better manage risk during potentially volatile weeks ahead. Create your live VT Markets account and start trading now.

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