The GBP/JPY pair retreated sharply from 200.25, close to the peak levels seen since July 2024, under the influence of active selling of the pound. Long-term UK bonds have climbed to their highest level since 1998, forcing Prime Minister Keir Starmer's government to take steps to restore market confidence. In addition, the moderate strengthening of the U.S. dollar overshadows the Bank of England's cautious rate cut last month, contributing to the pound's underperformance. This has become the main obstacle for GBP/JPY, preventing it from capitalizing on the overnight rally.

At the same time, uncertainty regarding the timing of the next Bank of Japan rate hike is creating pressure on the Japanese currency. Stability in equity markets is also fueling demand for the safe-haven yen. This requires caution before confirming that spot prices have peaked and are preparing for more significant losses.

Today, Tuesday, no major UK economic data releases are expected, leaving the pound sterling's performance entirely dependent on movements in the bond market. However, attention should be paid to Wednesday's Bank of England monetary policy report hearings, the outcome of which could be a key factor providing momentum and influencing the short-term dynamics of GBP/JPY.

From a technical perspective, the pair has found support at the confluence of the 9-day and 14-day EMAs, just below the 199.00 round level. A move lower would bring prices toward the 50-day SMA at 198.40, followed by the 198.00 round level. A break below this would open the way for further declines. On the opposite side, major resistance remains at 200.25, the same level observed last month.

Oscillators on the daily chart are neutral, indicating that the pair has not yet chosen a direction.