The British Pound fell further on Monday, hitting a one-week low of 201.35 against the Yen. This drop was caused by a disappointing UK employment report and worries about renewed trade tensions between the US and China. The UK jobless rate unexpectedly increased to 4.8% for the three months leading up to August, compared to 4.7% in July. Meanwhile, net employment grew by only 91K, down from 232K in July. From a technical perspective, the Pound’s drop from 203.50 against the Yen shows a downward trend since the high of 205.33 in early October. The 4-hour RSI is below 40, signaling bearish momentum. Prices are close to weekly lows at 201.35. The next target is around 200.40, which aligns with previous highs from September 26 and lows from October 6. The former support level at 202.00 has turned into resistance, while 203.50 is a barrier before the October 8 high of 206.35.

Currency Performance

Looking at currency performance, the British Pound had mixed results, showing strength against the Australian Dollar but losing 0.65% against the Yen and 0.53% against the Euro. The currency heat map shows percentage changes among major currencies, with the Pound generally performing worse. The Pound’s recent inability to stay above 203.50 indicates that sellers have the upper hand now. The price breaking down to the 201.35 area, a new one-week low, confirms this downward trend, driven by weaknesses in the UK economy. Recent reports back this assessment, showing the UK jobless rate unexpectedly rose to 4.8% in August 2025. Additionally, inflation data for September 2025 was reported at 2.9%, which is above the Bank of England’s target, complicating their support for the economy. This mix of rising unemployment and high inflation points to challenging times ahead for the Pound.

Global Economic Mood

On a global scale, the mood is souring due to new trade tensions between the US and China. This risk-averse sentiment is boosting the Japanese Yen, which investors typically turn to for safety. The weak Pound combined with the strong Yen is causing a sharp drop in GBP/JPY. For traders dealing in derivatives, this situation makes buying put options on GBP/JPY a smart strategy. With crucial support levels at 200.40 and then down to 198.85, puts with strike prices near 200.00 could provide a favorable risk-reward balance in the coming weeks. This approach allows traders to take advantage of further declines while controlling the maximum loss. Volatility in this currency pair is often high, and the current economic situation suggests that will continue. The unexpected market movements seen during the UK mini-budget crisis in late 2022 remind us how quickly GBP/JPY can change direction. Therefore, using options to express a bearish outlook is a better choice than shorting futures directly, as it helps minimize the risk of sudden price surges against your position. Create your live VT Markets account and start trading now.

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