GBP/JPY is currently at 201.10, up 0.53% after holding a vital support level. It is close to its recent highs. However, the Relative Strength Index (RSI) is below 50, indicating weaker bullish momentum and greater downside risk. If support fails, the pair could drop to the 199.60–197.50 range. To challenge resistance, GBP/JPY needs to recover above 202.00. The pair is showing signs of recovery as it trades above the 50-day Simple Moving Average (SMA) of 200.97, after hitting a session low of 199.61. Right now, GBP/JPY might consolidate below 202.00 since the RSI suggests bearish pressure nearing 50.

Price Target Levels

If the price drops below 201.00, it may target the 199.61 support, then the October 2 low of 197.49, and finally the 200-day SMA at 195.85. If it breaks above 202.00, the next resistance would be at the 20-day SMA of 202.32, with additional targets at 203.00 and 204.00. The GBP’s weekly performance against major currencies shows it’s only strong against the New Zealand Dollar. It fell the most against the Euro by 0.67%, and its performance is mixed against the USD, CAD, AUD, and CHF. Christian Borjon Valencia, an experienced trader, began his career in 2010 focusing on technical analysis. GBP/JPY is currently at a critical level around 201.10, slightly above its 50-day moving average. While buyers defended the support near 199.61 previously, the RSI being below 50 shows that bullish momentum is weakening, increasing the likelihood of a downward move in the coming weeks. This technical weakness is supported by recent UK economic data. The latest October inflation report was 2.8%, just below expectations. The Bank of England indicated this week that it has likely finished raising rates and might consider cuts early next year, which could limit the pound’s strength. Therefore, we are looking at potential scenarios where GBP might underperform.

Potential Trading Strategies

On the other hand, there is talk that the Bank of Japan may shift from its ultra-loose policy in 2026, which could support the yen. We recall the significant market interventions in 2024, and the possibility of similar actions likely dissuades aggressive bets against the yen. This sets the stage for the yen to strengthen quickly if any policy changes are hinted. For derivative traders, this situation suggests considering put options or short positions if the pair convincingly breaks below the 201.00 level. A clear drop below the recent low of 199.61 would signal a strong confirmation, opening a path to test the 197.50 zone. This strategy allows us to take advantage of the rising downside risk while clearly defining our entry point. Conversely, we must keep an eye on the 202.00 resistance level. A sustained rise above the 20-day moving average at 202.32 would negate the immediate bearish outlook, potentially signaling a retest of higher levels. In such a case, closing short positions and considering short-term call options would be wise. Create your live VT Markets account and start trading now.

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