GBP/JPY Price Near 210.00 as Yen Stays Under Pressure

The GBP/JPY price rose for a second straight day on Monday, trading at 209.91, just under the 210.00 mark. Japan's public debt, higher oil prices and weak domestic data are keeping the Japanese Yen under pressure, according to FXStreet.

Key Takeaways

Rebound extended: The cross bounced from near 208.00 last week and has now gained two days in a row.
Resistance close by: The first hurdle is 210.20, where the September 25, October 6 and October 7 highs sit.
Weak spending: Japanese household spending declined for a ninth consecutive month in August.

What Happened

GBP/JPY extended its gains on Monday as the Yen weakened against the British Pound and broadly across the market. FXStreet linked the move to concerns over Japan's debt and to rising oil prices.

The Yen had already turned lower across the board on Friday, after the household spending data. The ninth monthly decline adds to evidence that higher prices are weighing on domestic demand in Japan.

Background

Japan's public debt is one of the largest among major economies, and government growth plans threaten more spending. FXStreet's analysis says a global government bond crisis is fully affecting the Yen.

Prime Minister Sanae Takaichi has pledged fiscal policy that is "responsive and proactive". The pledge has so far failed to restore market confidence, FXStreet said.

Market Impact

GBP/JPY: The cross is exposed to further Yen weakness tied to debt worries. On the 4-hour chart, the 14-period Relative Strength Index advanced past 60.
Japanese Yen vs Swiss Franc: The Yen was the strongest against the Swiss Franc in today's percentage-change table, so its weakness was not uniform. The exact moves were not reproduced.
Oil: Higher oil prices are cited as one source of pressure on the Yen. FXStreet gives no price level or percentage move.

What to Watch Next

Resistance at 210.20: This is the nearest ceiling above the current level, formed by the late-September and early-October highs.
Monthly range top near 211.00: FXStreet calls this area key resistance. The September 18 high at 211.28 and the September 4 highs around 211.80 lie beyond it.
Support at 209.00 and below: Friday's lows at 209.00 come first, then early October lows near 207.60. The 207.00 area is a round figure FXStreet describes as common for trend shifts.

Bottom Line

FXStreet's analysis ties the Yen's weakness to fiscal credibility as much as to the latest data. GBP/JPY currently sits between Friday's lows at 209.00 and the 210.20 highs, with Japan's debt and spending plans the cited pressure on the Yen.

GBP/JPY Price Nears 210.00 as Yen Weakness Persists