GBP/JPY Price Forecast: Pound retreats below 214.00 as Japanese data supports Yen

The British Pound (GBP) is practically flat against the Japanese Yen (JPY) on Friday, trading a few pips below 214.00 at the time of writing, after bouncing from weekly lows near 213.35 on Thursday. The pair remains on track for its second consecutive weekly gain, although a string of positive Japanese data has provided some respite to a weak Japanese Yen. 

Tokyo Consumer Prices Index (CPI) data released earlier on Friday has shown easing inflationary pressures in May. Nevertheless, stronger-than-expected Industrial Production data, an unexpected decline in unemployment, and upbeat Retail Trade figures have revealed that the economy remains resilient, despite the energy shock, and feed hopes that the Bank of Japan (BoJ) will hike rates in June.

Later on the day, Bank of England (BoE) Governor Andrew Bailey is expected to speak at the Reykjavik Economic Conference. Bailey, however, is unlikely to say anything new on monetary policy. The BoE is expected to leave interest rates unchanged for some time.

Technical Analysis: In a bearish correction from 214.70 highs

GBP/JPY trades at 213.88, with momentum indicators dipping into bearish territory, and a lower high supporting the idea that the pair is on a bearish correction from last week's bullish cycle. The 4-hour Relative Strength Index (RSI) has slipped back below the 50 line, and the Moving Average Convergence Divergence (MACD) remains slightly negative, which hints at fading upside momentum.

Bars, however, are likely to be challenged ahead of 213.30, where May 21 and 28 highs meet the 38.2% Fibonacci retracement of last week's bull run. If that level gives way, the 61.8% Fibonacci retracement, at 212.65, is a common target for corrections and is coincident with the May 19 and 20 lows.

On the upside, the key 200-period SMA, at the 214.20 area, has capped bulls on Friday, and is closing the path towards the May 25 high, near 214.70 for now.

(The technical analysis of this story was written with the help of an AI tool.)