GBP/JPY rose for a second day. It bounced from near 207.50 and climbed from a low of 207.57 to test resistance at 209.60. The 209.60 level also blocked gains last Thursday and Friday.
The rise followed weak Japanese GDP data, which eased recent Yen strength. Japan’s economy grew just 0.1% in Q4 2025, below the 0.4% forecast. The annualised rate was 0.2%, far under the 1.6% forecast.
Key Event Risk Ahead
The UK calendar was quiet on Monday. Traders are now waiting for UK employment data due Tuesday, which kept positioning cautious.
From a technical view, price is testing 209.60 as the neckline of a possible bullish Head & Shoulders pattern. MACD is above the Signal line near zero. The histogram is positive and widening, and RSI is near 50.
If the pair breaks above 209.60, the next levels are 210.54 and around 211.65. Support sits near 208.00. A drop below 207.57 would invalidate the bullish setup.
The pair is testing 209.60 mainly because Japan showed very little growth late last year. GDP for Q4 2025 came in at a modest 0.1%, well below expectations. This also highlights the policy gap between the UK’s higher interest rates and Japan’s ongoing stimulus.
Options Strategy And Risk
On the Pound side, caution is needed ahead of UK employment data tomorrow. UK inflation rose to 4.2% in January 2026. If wages come in strong, the Bank of England may need to stay aggressive. For context, average earnings growth was around 5.8% for much of the second half of 2025, which can keep pressure on rates.
With a bullish pattern pointing toward 211.65, buying call options with a strike near 210.00 may be a practical way to trade the potential move. This approach keeps downside risk limited to the premium paid. Volatility is also high. The pair’s average daily range was over 180 pips last month, which makes defined-risk options more appealing.
The main risk is a weak UK jobs report, which could push the pair sharply lower. Watch 207.57 closely. A break below it would invalidate the bullish setup. A small position in put options could help hedge against a negative surprise.
Create your live VT Markets account and start trading now.
here to set up a live account on VT Markets now
