GBP/JPY Volatility Ahead: BoE and BoJ Policy Decisions Loom

The GBP/JPY cross is trading on the front foot today as traders await the policy decisions from the Bank of England (BoE) and the Bank of Japan (BoJ) later this week. The BoE is expected to leave interest rates unchanged at 3.75% for a sixth consecutive meeting, with attention turning to the vote split among policymakers.

A more hawkish vote split could lift the British Pound (GBP), but high energy prices linked to the war in the Middle East continue to cloud the inflation outlook, leaving markets positioned for a rate increase in the coming months. On the other hand, traders are fully convinced that the BoJ will raise interest rates for the second time this year, taking the policy rate to 1.25%.

GBP/JPY remains down roughly 3.50% so far this month and could face fresh selling pressure if the BoJ signals additional hikes at a faster pace. The cross retains a bearish near-term bias as it holds beneath a dense band of moving average and Fibonacci resistances, with momentum indicators remaining weak.

The immediate support level sits near 207, while resistance is seen at the 23.6% Fibonacci retracement at 209.32, followed by a tight Fibonacci cluster between 210.69 (38.2%) and 211.79 (50.0%). A stronger recovery would bring the 61.8% retracement at 212.90 and the 200-day Simple Moving Average (SMA) at 213.11 into focus.