The Pound Sterling is trying to rise above 212.00 after recently dropping to about 211.00. This change is linked to the Japanese Yen losing value, following Japan’s Prime Minister Sanae Takaichi calling a snap election for February 8. Concerns are growing that her policies could worsen the national debt. The GBP/JPY pair is currently at 211.81 and has not maintained the upward trend from November, indicating a potential decline. Key technical indicators like MACD and RSI suggest a neutral to bearish trend. If the pair struggles to break through 212.00, it might fall further to 210.30 and 208.90. On the other hand, successfully crossing above could lead to targets of 212.80 and 214.30.

Japanese Yen Weakness and Currency Trends

Today, the Japanese Yen showed mixed results. It performed best against the US Dollar but fell by 0.20%. However, it weakened against other major currencies. A heat map illustrates these percentage changes, helping us understand the Yen’s position against different currencies. The upcoming snap election on February 8 is contributing to the Yen’s weakness, and we expect this trend to continue. While GBP/JPY is facing resistance at 212.00, the overall situation suggests that the Yen may drop further. This creates an opportunity, as markets anticipate a victory for Prime Minister Takaichi and her stimulating economic policies. Concerns about a fiscal crisis in Japan are valid, making short Yen positions appealing. Japan’s debt-to-GDP ratio has surpassed 270%, and with the latest core CPI data for December 2025 reaching 2.5%, additional monetary easing could greatly devalue the currency. In contrast, the UK saw its Q4 2025 GDP growth revised slightly higher to 0.2%, implying that the Bank of England may keep interest rates steady for a longer period. With the election approaching, we expect increased volatility, which makes using options a smart strategy. We should think about buying GBP/JPY call options with a strike price around 213.00, expiring in March. This way, we can profit if the pair rises after the election while minimizing our potential losses if it stays below the 212.00 resistance.

Historical Context and Intervention Risks

We’ve encountered this political scenario before and should anticipate its possible effects on the currency. Over the past decade, “Abenomics” led to a long period of Yen weakness, with USD/JPY climbing from the 80s to above 120. The current political situation in Japan shares similarities with that time, suggesting a similar trend of Yen depreciation could occur again. That said, we must stay alert to the risks of official government intervention. In 2022, the Ministry of Finance rapidly intervened to support the Yen when they thought its decline was excessive. While Takaichi’s government might be more accepting of a weak Yen, a sudden drop below key psychological levels could still prompt a reaction. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now