Last week, GBP/JPY surged to just below ¥212 on improving UK data, but then plunged back into the ¥209 range as global equity losses triggered yen buying, settling into volatile trading in the ¥210 range.
Trading from last week into the start of this week was volatile. In the first half of the period, GBP/JPY tested the ¥212 resistance level against a backdrop of a stronger pound. An improvement in the UK unemployment rate and an upside surprise in the UK's September CPI revived expectations of a Bank of England rate hike, strengthening the pound against the dollar and sending GBP/JPY up to around ¥212.
However, from the 22nd, selling in AI-related stocks intensified following earnings from major US semiconductor company Lam Research. Yen buying as a safe-haven asset accelerated rapidly, and GBP/JPY plunged along with USD/JPY. During the week, the pair at one point extended its decline to ¥209.12.
Yen strength briefly eased toward the weekend as concerns over Europe abated and US technology stocks recovered, but the pair settled into range-bound trading around ¥210 amid market caution ahead of the autumn budget statement.
Overall, while the mid-¥210s have provided firm support on dips, the pair is likely to remain in the ¥209.10–¥210.50 range, with the possibility of renewed movement depending on upcoming events. This week, markets are expected to remain on the sidelines ahead of the UK budget statement and central bank events.