Having raised rates to the 30-year high of 0.75% in late 2025, the Bank of Japan kept them on hold in January and signalled the possibility of more hikes, having raised overall projections for inflation. The Japanese government is preparing to dissolve the National Diet for a snap election, which focuses on proposals for higher governmental spending, so traders are concentrating on any cracks in the BoJ’s moderately hawkish signalling and the ongoing likelihood of intervention if the dollar breaches ¥160.
The long-running uptrend for pound-yen, though mature, is still clearly active with ATR increasing somewhat in recent weeks while volume hasn’t declined overall. The slow stochastic being fairly close to neutral suggests that another upward wave is quite likely in the near future, but the possible target of this isn’t clear. Equally, buying at the top is usually much riskier than waiting to enter at a lower price.
The 100% weekly Fibonacci extension around ¥211.70 might flip to being a support if the price holds above it for a few more periods. It certainly looks like the 20 SMA is a dynamic support, having been tested several times since the middle of November 2025 without success. With no key data coming out in the next few days, traders are likely to focus on political news from Japan.
This article was submitted by Michael Stark, an analyst at Exness.
For the latest analysis, ideas for trading and more, follow Michael on X: @MStarkExness.
The opinions in this article are personal to the writer; they do not represent those of Exness. This is not a recommendation to trade.
