see also: InstaForex trading indicators for GBP/JPY

The GBP/JPY pair continues its steady ascent, showing positive momentum for an eighth session in a row. On Wednesday quotes are consolidating around the midrange near 215.00, edging closer to the July 2008 highs reached near 215.90, and moving toward the 2008 highs at 221.80. The key driver remains the fundamental weakness of the Japanese yen, amid the ongoing blockade of the Strait of Hormuz and rising stagflation risks for the Japanese economy.

Middle East crisis, hawkish BoE expectations versus stagflationary risks

1. Despite lingering hopes for a resumption of diplomacy between the United States and Iran, investors remain highly concerned about the economic consequences of instability in the Strait of Hormuz. The United States naval blockade of Iranian ports, which came into effect on Monday, threatens further restrictions on oil flows through this strategically important waterway. For Japan, which critically depends on energy imports from the Middle East, this creates an existential threat. The economy, already teetering on the verge of recession, will face significant pressure in the foreseeable future, which directly undermines the yen and serves as a key support factor for GBP/JPY.

The protracted nature of the conflict has materially narrowed the Bank of Japan's options for tightening monetary policy. Whereas, until recently, markets priced in a 60 to 70 percent probability of a rate hike at the April meeting on April 27–28, that scenario is becoming increasingly uncertain.

BoJ policymakers are split into two camps: some focus on rising inflation risks, while others prefer to wait and assess how the conflict will evolve. Deputy Governor Ryozo Himino said on Friday that, if the conflict in the Middle East persists and acts to reduce growth while simultaneously accelerating inflation, this will create a dilemma and a hard problem for us.

Minister of Economy, Trade and Industry Ryohei Akazawa stated that a rate hike in April could be among the options to support the currency, however, his comment encountered institutional constraints.

Economists warn that if the BoJ does not give clear signals, markets will begin to scale back expectations for an April move. This means that, if a hike does occur, it could surprise the market and trigger a rise in bond yields. On the other hand, keeping rates unchanged could also weaken the yen amid fears that the BoJ is falling behind the government bond yield curve.

2. The British pound, meanwhile, continues to receive support from expectations of a more hawkish stance by the Bank of England. Markets currently price in a high probability of at least one, and possibly two, rate hikes this year, as the war-induced jump in energy prices has lifted inflation forecasts.

However, local support for the pound, after Tuesday's trading, was provided only by retail sales data from the British Retail Consortium, which rose 3.1 percent year on year, markedly above forecasts (0.9 percent) and the February reading (0.7 percent).

In focus today are speeches by Bank of England Governor Andrew Bailey, at 15:50 and 18:00 GMT, which may provide new signals on the monetary policy trajectory.

Tomorrow, at 06:00 GMT, a key block of macro data will be released, including the UK GDP report for February. Economists expect growth of 0.1 percent month on month, which is small, but above the prior zero growth.

Key events

Conclusion

GBP/JPY continues to move confidently within a long-term uptrend, driven by the fundamental weakness of the yen. Japan, as a critical importer of Middle Eastern oil, finds itself at the epicenter of an "energy shock," and the outlook for its economy remains bleak. The Bank of Japan, confronted with a dilemma between inflation and recession, is highly likely to maintain a pause, which will continue to pressure the yen.

The pound, in turn, is supported by hawkish expectations, although tomorrow's GDP data pose a risk: a weak print could make markets doubt the BoE's ability to raise rates amid a stagnating economy.

The key area 215.00–216.00 will become the arena for a decisive battle in the coming days. Holding above 215.00 will preserve the bulls' chances of testing 216.00 and 217.50. The fundamental backdrop still supports the pair, and any pullback will likely be used to enter long positions. Investors should closely monitor Bailey's speeches and tomorrow's UK GDP data — these two factors will determine the pair's short-term dynamics.

see also our today's reviews:

- GBP/AUD: amid stagflation risks in Britain and hawkish RBA stance

- GBP/AUD: dynamics for 15.04.2026