The GBP/JPY has struggled to find any significant support following the Bank of Japan’s decision to change its yield curve policy, a move which many believe heralds the start of the end of its extra-ordinary loose monetary policy. Meanwhile, the pound has struggled ever since the Bank of England’s rate decision last week was perceived to be dovish by markets. The split among the MPC gave rise to speculation that the rate increases might stop sooner than expected as high inflation in the UK continues to hurt pockets of consumers and weigh on business activity. The ongoing industrial actions across the UK are likely to hurt the economy further.
As a result, the GBP/JPY pair has been falling continually in recent days, with minimal bounced. It did find some support around 158.60, but it has since struggled to old its own above the key 160 handle. At the time of writing, it was still struggle and so a move below this week’s low at 158.60 looked increasingly likely. If that level breaks and we hold below its then there is little further support until around the 157.00 area. But given the surprise policy change from the BoJ, the GBP/JPY could fall a lot lower over time. So, it is definitely one to keep a close eye on.