The GBP/JPY pair remains steady around the 201.00 level as traders look forward to the Bank of England (BoE) policy update. Concerns about the UK’s financial stability are weighing on the British Pound, while the Yen is gaining strength from expectations of a Bank of Japan (BoJ) rate hike and possible intervention. The pair is trying to hold onto gains after bouncing back from a one-month low near 199.00. Current trading reflects the anticipation surrounding the BoE’s decision, which could significantly impact the British Pound and the GBP/JPY cross.

Economic Indicators and Predictions

Economic data shows lower inflation, financial challenges, and rising unemployment in the UK. The market expects a 33% chance of a 25bps rate cut by the BoE, and there’s a 70% probability of a rate cut by the end of the year. Concerns about the UK’s financial outlook are growing ahead of the Autumn budget, while the Yen shows signs of improvement. The latest BoJ meeting minutes indicate a possible rate hike soon, which supports the Yen. However, expectations that Japan’s new Prime Minister will increase fiscal spending to tackle inflation may limit the Yen’s gains. The BoE’s interest rate decision is crucial, with potential changes affecting the Pound Sterling significantly. The consensus for the next interest rate release remains at 4%. With the market hesitating around the 201.00 level for GBP/JPY, we expect volatility today, November 6, 2025. The immediate focus is on the Bank of England’s interest rate decision, expected to remain at 4%. Any hints at a future cut could easily push the pair below the important 199.00 support level, which was tested just yesterday.

Current GBP/JPY Strategy

The outlook for a weaker Pound is growing, guiding our strategy. Recent data from the Office for National Statistics shows UK inflation slowed to 2.8% in October, marking the fourth month in a row of declines. With wage growth also easing to 4.5% and unemployment rising to 4.5%, the BoE has room to ease policies without worrying about inflation spiking. This follows the BoE’s first rate cut of the current cycle in August 2025, moving from 4.25% to the current 4%. We are also monitoring fiscal pressures ahead of the Autumn Budget on November 26, which could further impact the Pound. Thus, any rallies in GBP/JPY may present selling opportunities in the coming weeks. On the Yen’s side, it is seeing some support. The Bank of Japan exited its negative interest rate policy in March 2024, setting the policy rate at 0.25%. Markets expect another rate hike by early 2026. This situation contrasts sharply with the BoE’s easing approach, creating a fundamental divergence that favors a lower GBP/JPY. Given that the pair is trading near levels not seen consistently since before the 2008 financial crisis, it appears overextended. The combination of a dovish BoE and a cautiously hawkish BoJ suggests a downward correction is likely. A sustained drop below the 199.00 one-month low would indicate that this downward trend has started, and we should adjust our positions accordingly. Create your live VT Markets account and start trading now.

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