The British Pound has recently struggled to rise against the Japanese Yen, hovering just below the resistance level of 207.35. Support from Japanese authorities has helped the Yen, and the GBP/JPY is creating an ascending triangle pattern, which often signals a possible rise in prices. Since early November, the Pound has gained almost 3.5%. However, recent attempts to surpass 207.35 have failed due to warnings from Japan about preventing the Yen from weakening too much. Officials, including Cabinet Secretary Minoru Kihara, have emphasized their intention to manage any excessive fluctuations in the Yen’s value. Currently, the GBP/JPY forms an ascending triangle with its peak at 207.35. If it breaks above this point, it could aim for a 2024 high of 208.15, based on a 127.2% Fibonacci extension. Further targets include 209.15 and 210.30. If the price drops, support may be found around the triangle’s base near 205.85, close to recent lows of 205.20 and 204.30. This week’s currency changes show that the Yen is strong against the US Dollar. According to the heat map, it has changed by -0.31% against the Pound, 0.79% against the Euro, and 0.75% against the Swiss Franc. With the Pound’s rise against the Yen paused below 207.35, this is seen as a crucial moment. The ascending triangle pattern often suggests that the previous uptrend might continue. Traders should look for a clear break above this resistance in the upcoming weeks. This pattern indicates a potential bullish move, and traders might consider using call options with a strike price over 207.50 to take advantage of a possible breakout. The economic situation supports this idea, as there is still a significant difference in interest rates between the UK and Japan. Data from November 2025 revealed that UK inflation was at 3.1%, which keeps the Bank of England’s approach aggressive, while the Bank of Japan continues its low-rate policy. However, we must be cautious about possible interventions from Japanese officials. Their past actions in 2022 showed they can effectively influence the market, and though no interventions have occurred recently, their verbal warnings have provided support for the Yen. A good protective strategy would be to buy put options with a strike below the triangle’s base of 205.85 to guard against any sudden drop caused by intervention. The market seems to be testing Japan’s Ministry of Finance, especially with the carry trade remaining profitable. As long as the Bank of England maintains its interest rates and the Bank of Japan is slow to tighten policies, the trend for GBP/JPY looks upward. Recent positive data from UK services also supports the Pound. Looking ahead, we are closely monitoring upcoming UK CPI data and the next Bank of Japan policy meeting later this month. Any hint of weaker inflation in the UK or a more assertive approach from the BoJ could change the bullish outlook. Thus, anyone holding long positions should manage their risk tightly around the crucial support level of 205.85.

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