The GBP/JPY pair has been showing a positive trend for eight consecutive days, trading above the round level of 215.00, close to the highs of July 2008.

Despite hopes for the resumption of peace negotiations between the United States and Iran, investors remain cautious due to economic issues arising from instability in the Strait of Hormuz. Given that Japan heavily depends on oil imports from the Middle East, a blockade of Iranian ports by the United States could further reduce supplies through this strategically important waterway. This factor heightens concerns that the Japanese economy may face serious challenges in the near future, which in turn puts pressure on the Japanese yen and supports the GBP/JPY currency pair.

On the other hand, the British pound is supported by expectations of a more hawkish stance from the Bank of England. Markets are currently pricing in a high probability of at least one—and possibly two—interest rate hikes this year, as rising energy prices due to the conflict have increased inflation forecasts. This further strengthens GBP/JPY. However, growing expectations of a possible interest rate hike by the Bank of Japan at its April meeting, along with concerns about potential interventions, are preventing bears from aggressively selling the yen, thereby limiting the pair's movement.

From a technical perspective, the daily Relative Strength Index (RSI) has approached the overbought zone. This indicates a likelihood of short-term consolidation or a moderate pullback before traders begin opening positions again in line with the recently established upward trend. Market participants are awaiting a speech by Bank of England Governor Andrew Bailey, which is expected to provide new momentum today, as well as ahead of the release of UK economic data on Thursday. However, the positive fundamental backdrop suggests that any corrective decline will most likely be viewed as a buying opportunity.

The table below shows the percentage change of the Japanese yen against major currencies today, noting that the yen posted the strongest gains against the euro.