GBP/JPY fell for a second day as sterling weakened amid UK political uncertainty. The pair traded near 213.08 after an intraday high around 213.70, down about 0.15%.
Pressure on Prime Minister Keir Starmer rose after Labour losses in last week’s local elections. Reports say more than 80 Labour MPs have urged him to resign, and four cabinet ministers have stepped down.
Uk Political Pressure Builds
Wes Streeting has been named as a possible challenger. Starmer has said he will not resign, and reports say allies expect him to face any contest.
The drop was limited as the yen struggled amid Middle East tensions and higher oil prices. Japan relies heavily on energy imports from the region.
Oil-led inflation fears are affecting rate expectations. Markets price in two more Bank of England rate rises by year-end, while the Bank of Japan is expected to keep tightening gradually.
On charts, GBP/JPY is below the 20-day SMA near 214.30 and capped by the upper Bollinger Band near 216.66. RSI is in the mid-40s and ADX is in the mid-20s.
Technical Levels And Market Focus
Resistance sits near 214.29, then 216.66. Support is near 211.94, with further downside if price closes below that level.
The British Pound is clearly feeling the heat from the political drama in Westminster. A recent YouGov poll shows the Labour party’s lead over the Conservatives has narrowed to just 5 points, which is why we are seeing GBP/JPY slip towards 213.00. This near-term uncertainty is creating selling pressure on the pound.
However, the Japanese Yen is not a source of strength right now. With Brent crude trading stubbornly above $95 per barrel due to ongoing geopolitical risks, Japan’s high energy import costs are a major concern for its economic outlook. This keeps the Yen weak and helps put a floor under any significant drops in the GBP/JPY pair.
We believe the main story remains the growing gap between central bank policies. Overnight Index Swaps are now pricing in a 75% probability of another Bank of England rate hike in June, pushing UK 10-year Gilts over 4.8%. In contrast, the 10-year Japanese Government Bond yield is struggling to stay above 1.2%, making the pound far more attractive to hold for its yield.
This pattern is familiar, as we saw last year in 2025 when the Bank of Japan’s first small steps away from negative rates were quickly overshadowed by much larger hikes elsewhere. The BoJ is likely to remain cautious, especially with high energy prices threatening to slow down their economy. This suggests the interest rate gap will only continue to widen.
For traders, this political noise in the UK could be an opportunity in the coming weeks. We are watching the technical support level around the lower Bollinger Band near 211.94 as a potential entry point to buy into the pair’s broader uptrend. Any dip below 212.00 may be short-lived if the fundamental story of rate divergence holds true.
