The GBP/JPY exchange rate is currently below the resistance level of 211.60. The British Pound is slowly rising against the Japanese Yen, despite some modest risk sentiment and lower trading volumes due to New Year holidays in China and Japan. The UK Manufacturing PMI is expected to show better business activity for December, with a rise to 51.2 from 50.2 in November. However, this release will likely have little impact unless the numbers differ significantly from what was originally expected.

Exchange Rate Dynamics

The GBP/JPY is trading at 211.17, struggling to break above 211.50. A bearish divergence indicated by the RSI suggests a potential downward turn. Immediate support is at the trendline between 210.15 and 210.05. If buyers manage to push past 211.59, targets such as the 127.2% Fibonacci extension at 212.75 and the 161.8% extension at 214.38 could come into play. Meanwhile, the Japanese Yen remains the strongest against the US Dollar, even though it has performed modestly against other major currencies. The Pound is facing strong resistance at the 211.60 level against the Yen. This barrier has held firm for the past two weeks, making it an important point to monitor. Traders in derivatives should be aware of the mixed signals, as a breakout or rejection is expected soon. The UK economy’s underlying strength supports the Pound. The final UK Manufacturing PMI for December 2025 confirmed an expansion, and recent data from the ONS showed a 0.3% GDP growth in the last quarter of 2025. This positive backdrop might encourage traders to purchase call options, betting on a future breakthrough above the resistance level.

Technical And Fundamental Analysis

However, a bearish divergence observed on the short-term charts indicates a possible trend reversal. This technical hint suggests that upward momentum is weakening, which could attract traders looking at put options. Reflecting on the Bank of England’s meeting in December 2025, discussions about when to ease policy are increasing, which might limit the Pound’s strength. Due to the tight range between support around 210.05 and resistance at 211.60, we could see a significant price movement soon. Remember the major spikes in volatility for this pair, such as during the autumn of 2022, which illustrate how quickly it can react to key level breaks. Thus, strategies like a long straddle could be effective, allowing for profit from large swings in either direction. It’s also important to note that the recent weakness of the Yen is partly due to low trading volumes during the holiday season. As Japanese traders return, we might see the Yen strengthen, particularly since core inflation in late 2025 stayed above the Bank of Japan’s 2% target. This potential gain for the Yen could easily drive the pair down from its current highs. Create your live VT Markets account and start trading now.

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