GBP/JPY fell on Thursday, ending a four-day rise and moving below 213.00. The pair failed to extend gains beyond the March peak near 213.30, then lost momentum after reaching 213.30. Risk-off trading supported the Japanese Yen and added pressure to the Pound. Reports on the US-Iran war were mixed, with Abbas Araghchi denying direct talks with the US while Donald Trump said Iranian leaders were seeking to negotiate.

Technical Picture And Immediate Levels

Iran and Israel continued exchanging attacks on Thursday. The Strait of Hormuz has been closed for the fourth consecutive week, pushing Brent Crude Oil to $99 per barrel. On the 4-hour chart, GBP/JPY traded at 212.83 and stayed above a rising trendline from 210.59. The Relative Strength Index dropped to 53 from around 60, and the MACD turned marginally negative with the MACD line below the signal line. Price tested trendline support at 212.70, with further levels at 212.26 and 211.60. Resistance stood at 213.30, with upside levels at 213.75 and 214.05. We recall how this time last year, in March 2025, the GBP/JPY pair struggled to break past the 213.30 resistance level. This hesitation was fueled by significant global uncertainty, including a conflict between the US and Iran which led to the closure of the Strait of Hormuz. The resulting risk-averse sentiment provided strong support for the safe-haven Japanese Yen. The environment today is markedly different, with the pair trading much lower. Geopolitical tensions have eased, and Brent crude oil is now trading near $85 per barrel, a stark contrast to the $99 highs we saw during the 2025 supply disruption. Current UK inflation data shows a rate of 2.1%, giving the Bank of England less urgency to hike rates aggressively compared to the concerns of last year.

Strategy Considerations In A Lower Volatility Regime

Given this backdrop of lower volatility, derivative traders might find value in options strategies that benefit from a potential price swing. Last year’s volatile market made options contracts expensive, but current conditions make strategies like long straddles more affordable. This approach allows traders to position for a significant move without betting on a specific direction, hedging against unexpected policy shifts from either the Bank of England or the Bank of Japan. The carry trade, which was unattractive in the risk-off climate of March 2025, has also regained its appeal. With the Bank of England’s official rate holding at 5.25% and the Bank of Japan having only just ended its negative interest rate policy, the yield differential remains significant. Traders using futures contracts can capture this differential, provided that market stability continues. While the 213.30 level was the key resistance to watch last year, traders should now focus on the 206.00 area as a potential ceiling. A failure to break this level could see a repeat of the bearish correction we saw in 2025. Similarly, a decisive break below the current support around 204.50 would be a bearish signal, reminiscent of when the trendline at 212.70 gave way a year ago. Create your live VT Markets account and start trading now.

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