Trading GBP/JPY
Every day investors from all over the world fire up their computers to start day trading the GBP/JPY, otherwise known as the ‘Beast,’ ‘Dragon’ or ‘Geppy.’ This page will look at the history of the GBP/JPY currency pair, as well as its benefits and risks, including notable volatility and liquidity. We then break down strategy, charts, technical analysis, trading hours, plus investing tips for 2023.
GBP/JPY Trading Brokers
#1 - Forex.com
Forex.com is a leading FX broker. The brand offers a wide range of currency pairs and some of the lowest fees in the industry. Spreads on the EUR/USD come in as low as 0.0 with a $7 commission per $100k.
"Forex.com is an excellent broker for forex traders with over 80 currency pairs, tight spreads, low commissions and powerful platforms. The brand is also heavily regulated while its parent company is listed on the NASDAQ, giving it a high trust score."
- DayTrading Review Team
- GBPUSD Spread: 1.0
- EURUSD Spread: 1.0
- EURGBP Spread: 1.0
- Total Assets: 80+
- Leverage: 1:50
- Platforms: MT4, MT5, TradingView, eSignal, AutoChartist, TradingCentral
Stocks Trading
Forex.com offers access to thousands of US, EU and UK stocks, with spreads of just 1 point. Speculate on household names as well as new IPOs. US stocks are available from just 1.8 cents per share.
About Forex.com
Forex.com boasts a global reputation with multiple awards and 20+ years experience. Regulated in the US, EU, UK and Canada they provide a huge range of markets, not just forex, and offer competitive fees on a cutting-edge platform. The brand also provides a suite of additional tools, from performance analytics and SMART Signals to advanced charts and strategy builders.
Pros
- Fast execution speed of less than 1 second
- Respected and trusted broker overseen by tier-one regulators including the US SEC
- Low minimum deposit of $100
Cons
- Investment offering varies between countries
- $15 monthly inactivity fee
- No copy trading platform
#2 - NinjaTrader
NinjaTrader supports the trading of popular currencies including the EUR/USD. The trading software also offers unique features tailored to forex trading, including specific order and market windows.
"We recommend NinjaTrader for high-volume futures traders looking for low fees and premium analysis tools."
- DayTrading Review Team
- GBPUSD Spread: 1.6
- EURUSD Spread: 1.3
- EURGBP Spread: 1.6
- Total Assets: 50+
- Leverage: 1:50
- Platforms: eSignal
Stocks Trading
Stocks can be traded by connecting the NinjaTrader platform to supporting brokers. You can then take positions on large public companies and household names via advanced trading software.
Crypto Trading
Trade micro Bitcoin futures with low fees and leading charting tools. Get exposure to Bitcoin through CME Group's centralized exchange with robust risk management tools.
About NinjaTrader
NinjaTrader is a US-headquartered and regulated brokerage that specializes in futures trading. There are three pricing plans to suit different needs and budgets, as well as ultra-low margins on popular contracts. The brand's award-winning charting software and trading platform also offers a high-degree of customization and superb technical analysis features.
Pros
- Excellent trading software for active users with bespoke widgets and indicators
- Industry-leading futures broker with multiple awards
- Widely respected and heavily authorized by the NFA and CFTC
Cons
- Withdrawal fee on some funding methods
- Non forex and futures trading requires signing up with partner brokers
- Premium platform tools come with an extra charge
#3 - OANDA US
OANDA offers 68 forex pairs, more than many alternatives. The broker's in-house platform also offers impressive execution speeds and a suite of advanced charting and analysis tools.
"We recommend OANDA for US traders seeking a user-friendly platform with premium market research and a straightforward joining process. OANDA is a particularly good pick if you want a heavily regulated broker with a secure trading environment."
- DayTrading Review Team
- GBPUSD Spread: 3.4
- EURUSD Spread: 1.6
- EURGBP Spread: 1.7
- Total Assets: 65+
- Leverage: 1:50
- Platforms: MT4, TradingView, AutoChartist
Crypto Trading
Speculate on the world's biggest cryptos by market cap. Commissions are lower than many peers starting at 0.25%. Clients can spot trade cryptocurrencies on Paxos's itBit exchange through the OANDA platform via OANDA’s partnership with Paxos. Users can trade digital currencies in a few taps through the iOS and Android mobile app.
About OANDA US
OANDA is a popular brand offering exceptional execution, low deposit requirements and advanced charting and trading platform features. The top-rated brand has over 25 years of experience and is regulated by trusted agencies, including the NFA/CFTC. Around the clock support is available, alongside flexible contract sizes and automated trade executions.
Pros
- Reliable, trustworthy and secure brand with authorization from tier-one regulators
- US clients accepted
- API facilitates access to 25 years of historical data and rates from 200+ currencies
Cons
- Customer support not available on the weekend
#4 - Webull
Webull offers a modest collection of 17 currencies, including majors like EUR/USD. Forex can be traded on the feature-rich investing app with real-time quotes and low spreads.
"Webull is best for traders looking to buy and sell stocks on a user-friendly app with zero commissions."
- DayTrading Review Team
- GBPUSD Spread: 0.4
- EURUSD Spread: 0.2
- EURGBP Spread: 0.4
- Total Assets: 15+
- Leverage: 1:4
- Platforms: Own
Stocks Trading
Webull offers a fantastic list of 2000+ US stocks, fractional shares, options, ETFs, OTC, and ADRs. There is no commission on stocks, ETFs, and options. Full extended trading hours is available while custom screeners and watchlists aid the decision making process.
Crypto Trading
Webull offers trading on popular cryptos like Bitcoin against the US Dollar. With 35+ tokens and premium analysis tools, traders can review market trends and identify opportunities in a few taps.
About Webull
Webull is a US-regulated trading app that offers stocks, options, forex, cryptos, ETFs, fractional shares and more. The firm is authorized by the SEC and FINRA with a strong trust rating. Low fees, no minimum investment and generous bonuses have made the discount broker popular with online investors.
Pros
- Fractional shares
- Smart Advisor for auto investing
- No minimum deposit for beginners
Cons
- Sometimes sudden changes in trading conditions
- High deposit and withdrawal wire fees for non-US residents
- Day trading is limited for customers with less than $25,000 deposited
#5 - IG Group
IG offers currency trading on its award-winning web platform and mobile app. Comprehensive charts and forex analysis tools are also available through ProRealTime.
"IG offers a superb all-round package. Beginners will appreciate the user-friendly web platform and secure trading environment while established investors will rate the 17,000+ markets and top-tier market research."
- DayTrading Review Team
- GBPUSD Spread: 0.9
- EURUSD Spread: 0.8
- EURGBP Spread: 0.9
- Total Assets: 80+
- Leverage: 1:30 (Retail), 1:250 (Pro)
- Platforms: MT4, AutoChartist, TradingCentral
CFD Trading
IG offers an impressive suite of 17,000+ CFD instruments. Negative balance protection ensures accounts cannot drop below zero while custom price alerts and the IG Academy enhance the trading experience.
Stocks Trading
IG offers 13,000+ shares, with more listed firms than most competitors. Fees are low with no commission on US stocks. Extended hours trading is also available alongside ultra-fast execution speeds of 0.014 seconds.
Crypto Trading
11 popular cryptos are available, plus two crypto crosses. A crypto index is also offered, following the value of the top 10 digital currencies by market cap. All cryptos are available via CFDs.
About IG Group
IG is an award-winning broker that has an excellent reputation globally. The brand-US offers spread betting, CFD and forex trading across a comprehensive suite of markets. IG is also multi-regulated, provides a great trading app and has 50 years experience.
Pros
- Opening an account takes less than 5 minutes
- 24/5 customer support is available
- IG offers great educational materials including an extensive library of training and support on how to day trade successfully
Cons
- No copy trading platform
- Inactivity charge
#6 - Videforex
Trade 35 major, minor and exotic forex pairs through CFDs with floating spreads from 0.1 pips. Alternatively, binary options allow you to speculate on rising and falling prices with a fixed stake and payout.
"Newer traders will find a lot to enjoy about trading binary options on Videforex's easy-to-use proprietary platform, as well as the broker's copy trading solution. Payouts are also higher than most alternatives climbing to 98%."
- DayTrading Review Team
- GBPUSD Spread: Floating from 0.1 pips
- EURUSD Spread: Floating from 0.1 pips
- EURGBP Spread: Floating from 0.1 pips
- Total Assets: 35
- Leverage: 1:500
- Platforms: TradingView
CFD Trading
Videforex CFDs are available on forex, indices, cryptocurrencies and commodities with up to 1:500 leverage and tight spreads from near zero. CFDs incur a commission fee of 1%–2.5% and up to 5% for leveraged trades.
Stocks Trading
Trade binary options and CFDs on global stocks from US, European, Russian and Asian exchanges, as well as 37 indices covering a wide range of global markets. The access to stocks trumps many binary options brokers.
Crypto Trading
Traders can speculate on crypto prices in pairs with USD and CNY through binary options and CFDs. The range of digital currencies is fairly narrow vs alternatives but major tokens like Bitcoin are available.
About Videforex
Videforex offers access to stock, index, crypto, forex and commodities markets via binary options and CFDs. The proprietary platform, mobile app and integrated copy trading are user-friendly and will suit new and casual traders, and the market analysis tools and trading contests provide good ways to improve your trading skills.
Pros
- You can enter positions with just ¢0.01
- Mirror the trades of experienced investors with low fees
- Videforex offers transfers via a wide range of payment types, from credit cards to cryptocurrencies
Cons
- US clients aren’t accepted due to legal restrictions
- The broker isn’t overseen by a trusted regulatory agency
- No MetaTrader 4 integration
#7 - Pocket Option
Binary and OTC options can be purchased on over 40 foreign exchange pairs. Typical payouts are also decent at 81% and users can trade forex binary options in just a couple of clicks.
"We recommend Pocket Option for aspiring binary options traders looking for copy trading services and a low minimum investment."
- DayTrading Review Team
- GBPUSD Spread: N/A
- EURUSD Spread: N/A
- EURGBP Spread: N/A
- Total Assets: 50+
- Platforms: MT5
Stocks Trading
Trade 30 of the most popular American multinational stocks including Microsoft and Google. Payouts on big brands come in at a decent 92% while indices are available up to 67%.
Crypto Trading
Pocket Option supports major cryptocurrencies on a beginner-friendly app. Over 10 leading cryptocurrencies are available with very high leverage up to 1:1000.
About Pocket Option
Founded in 2017, Pocket Option is a binary options broker offering up/down contracts on forex, stocks and cryptocurrencies. With over 100,000 active users and a global reach, the brand has proven popular with budding traders. Pocket Option also supports dozens of payment methods and has a low minimum trade of just $1.
Pros
- MT5 iOS & Android app
- Copy trading
- Welcome bonuses and coupon codes
Cons
- The expiration time is limited on trades
- Only one account type is available
- No MT4 trading platform
#8 - Just2Trade
Traders can access a decent range of 60+ major, minor and exotic forex pairs through standard and ECN accounts with tight spreads from 0.5 and 0.0, respectively. Execution speeds are also faster than most competitors at 50ms, which will appeal to active forex day traders.
"Traders seeking a multi-asset broker with an exceptional range of 35,000+ assets, market-leading software and low trading fees should consider Just2Trade. The Try2BFunded program will also appeal to users seeking funded trading accounts."
- DayTrading Review Team
- GBPUSD Spread: 0.0
- EURUSD Spread: 0.0
- EURGBP Spread: 0.0
- Total Assets: 50+
- Leverage: 1:20
- Platforms: MT4, MT5, TradingCentral
CFD Trading
With CFDs on 20+ Polish and 30+ US stocks, as well as energies and seven global stock indices covering US, UK, European, Australian and Japanese markets, Just2Trade offers a superb selection of global assets.
Stocks Trading
As well as Just2Trade's 50+ stock CFDs, traders can access a huge variety of thousands of stocks traded on US and international exchanges. The chance to build an investment portfolio and benefit from dividends sets Just2Trade apart from most CFD brokers.
Crypto Trading
Traders can speculate on a modest selection of the largest cryptos by market cap including Bitcoin. On the downside, crypto trading is only available to clients from Asia which is more restrictive than many alternatives.
About Just2Trade
Just2Trade is a reliable multi-regulated broker registered with FINRA, NFA and CySEC. The company has 155,000 clients from 130 countries and stands out for its huge suite of instruments and additional features, including a social network, robo advisors and a funded trader programme.
Pros
- WhoTrades social network and copy trading through Novoadvisor
- The list of 35,000+ instruments is more than almost any other broker
- Competitive fee schedule and high-quality trade executions
Cons
- Research tools such as stock screeners require third-party applications
- Few standard educational resources compared to other brokers
- Cryptocurrency is only available in Asia
#9 - Sage FX
Trade 7 major, 21 minor and 29 exotic forex pairs with high leverage and a choice between STP or ECN accounts. Support is available around the clock and the TradeLocker forex software is provided.
"Sage FX will suit forex traders looking for high leverage and ECN spreads. The broker's prop trading service will also appeal to users looking for funded accounts with up to $200K available."
- DayTrading Review Team
- GBPUSD Spread: 0.9
- EURUSD Spread: 0.9
- EURGBP Spread: 2.5
- Total Assets: 57
- Leverage: 1:500
- Platforms: TradeLocker
CFD Trading
Trade CFDs on forex, stocks, metals, energies, indices, cryptos and dollar futures. Sage FX offers tight spreads and high leverage on all instruments from 1:100 to 1:500.
Stocks Trading
Speculate on price movements of 37 US and European blue chip stock CFDs, including Adidas, Intel and Volkswagen. On the negative side, the selection of stocks is limited vs alternatives and direct share dealing isn't provided.
Crypto Trading
Trade CFDs with leverage up to 1:100 on 23 crypto pairs with USD including popular tokens like Bitcoin and Ether and lesser-known options like OMG. On the downside, crypto-only pairs are not offered.
About Sage FX
SageFX is an offshore, unregulated CFD broker that offers highly leveraged trading on forex, stocks, commodities, indices and crypto via the TradeLocker platform. Traders can access commission-free trading or an ECN account with tight spreads. While the broker's regulatory status is weak, it does provide segregated accounts and two-factor authentication.
Pros
- High leverage up to 1:500
- Prop trading accounts with multiple funding tiers
- Ability to deposit and withdraw via Bitcoin
Cons
- Not regulated by any reputable body
- Lacks educational resources and other extra features
- Relatively narrow range of asset classes
#10 - ForexChief
ForexChief supports spot foreign exchange trading on all account types for 40+ major, minor and exotic currency pairs on the leading MT4 and MT5 platforms. Spreads are tight starting from zero and there are no dealers or requotes.
"ForexChief will prove popular with investors looking to trade highly leveraged CFDs on the popular MetaTrader platforms. The large welcome bonus and low starting deposit will also appeal to new traders."
- DayTrading Review Team
- GBPUSD Spread: 0.9
- EURUSD Spread: 0.4
- EURGBP Spread: 0.9
- Total Assets: 40
- Leverage: 1:1000
- Platforms: MT4, MT5
CFD Trading
ForexChief offers a competitive range of CFDs, encompassing crypto, indices, energies and metals. A clear pricing schedule is available to clients with no hidden charges. Traders can also access very high leverage up to 1:1000.
Stocks Trading
ForexChief offers 100 US company stocks CFDs for MT4 DirectFX and Classic+ account holders. Investors can speculate on the price of some of the world's largest companies, including Apple and Coca Cola. Spreads start from 5.
Crypto Trading
ForexChief supports crypto trading with five major digital currencies paired against the US dollar. Traders can bet on rising and falling prices with leveraged CFDs and market-leading trading software.
About ForexChief
ForexChief is a foreign exchange and CFD broker, established in 2014. The company is based offshore and registered with the VFSC and FMA. Users can choose between a wide selection of accounts and base currencies, making ForexChief accessible to global traders. The brand also stands out for its no deposit bonus and fee rebates for high-volume traders.
Pros
- A welcome deposit bonus is offered to new users
- MT4 and MT5 integration
- 8 account types to suit different strategies and requirements
Cons
- Withdrawal fees on several payment methods
- Limited market research
- Weak regulatory oversight
Chart
GBP/JPY Trading Explained
What does GBP/JPY mean? It is the relative value of the British pound against the value of the Japanese yen. Both are traded enough to qualify them amongst the top six global currencies. Today the yen accounts for around 16.8% of trading volume, while the pound represents approximately 12.8% of forex volume. The pair is considered a ‘cross.’ This means the US dollar is not used when calculating the exchange rate.
Why Day Trade GBP/JPY?
With so many currency pairs and trading vehicles available, including ETFs, futures, and options, why does the GBP/JPY warrant your attention?
- Volatility – It ensures plenty of opportunity for generating profit. Few currencies offer the volatility the GBP/JPY does. The pair moves on average 160 pips a day.
- Carry trades – The pound is a high-yielding currency, while the Japanese yen is a low-yielding one. That allows greater volatility and investors to implement a carry trade strategy, borrowing JPY to fund GBP.
- Risk tracking – When world economies look good, stocks and commodities rise while bonds fall. When things go the other way, the situation reverses. Those with an appetite and aversion to risk can utilize macro-economic sentiment to profit from market dynamics. GBP/JPY rises and falls with stocks and commodities.
- Availability of resources – Realtime trading today is more accessible than ever before. You have direct access to graphs, candlestick charts, and amazing indicators. For example, conducting Elliott wave analysis is more straightforward. In addition, you can access knowledge-rich trading communities like forums and trading analysis blogs.
Drawbacks & Risks
Downsides to day trading GBP/JPY include:
- Amplified losses – Daily trends can be strong; you often need to set wider stop-losses. Otherwise you could experience significant losses.
- Volatility – As one of the most volatile currency pairs, false signals are frequent. Traders can lose money and learn painful lessons. It isn’t nicknamed the ‘widow maker’ for no reason.
- Experience required – Although the promise of pips attracts beginners, many traders suggest that novice investors stay clear. Volatile moves in a consolidation phase are just one straightforward way you can be taken out.
- Automated competition – You must compete against sophisticated trading algorithms and expert advisors. As a result, how to trade successfully is no longer clear. You need more than historical charts, average daily ranges, and forecast analysis. The best indicator for the GBP/JPY pair may no longer be enough.
Influences on Movement
Energy Commodities
The relationship between the Japanese yen and energy pricing can have a significant impact for investing. Japan buys crude oil and natural gas to satisfy domestic energy requirements. In 2020, Japan was the 4th biggest importer of crude oil and second for natural gas.
There is a strong link between the price of the Japanese yen and the price of energy commodities. Historical data shows that when global energy prices shift, the yen usually moves in line with them. This has a knock-on effect on the GBP/JPY.
Other Factors
- News – Favourable or negative events pertaining to the GBP, JPY, or to their respective countries
- Indices – The UK’s FTSE 100 and Japan’s Nikkei 225 stock market index can also lead to strengthening and weakening
- Market sentiment – The market’s overall emotions and thoughts about each currency are reflected in the price of the GBP/JPY
- Currencies – The US dollar and euro, in particular, will impact the GBP/JPY. Currency pairs do not move independently of each other
- Governments – Major political elections and decisions impact the strength of respective currencies, such as Covid-19 policies
- Bonds – Gilt (debt securities issued by the BoE) and GJGB10 (Japan Generic Govt 10Y Yield) will influence the relationship of the highly volatile pair
- Bank of England (BoE) – This central bank and lender of last resort oversees monetary policy and interest rates. Its actions significantly affect the pound and the British economy as a whole
- Bank of Japan (BoJ) – The BoJ has been applying extremely low-interest rates for years, impacting the strength of the Japanese yen vs. the British pound. Day traders should monitor the Consumer Price Index (CPI), a key indicator of JPY-related currency crosses
Investors can feel wars and natural disasters in the GBP/JPY relationship. The savvy day trader won’t just focus on charts from Yahoo and historical data. They will keep track of multiple global factors using various sources.
Currency Correlations
Foreign exchange currencies do not move independently of each other. Because they are traded in pairs, their movements are tied to the movements of other pairs.
For example, if you are trading the GBP/JPY, you are handling a derivative of the GBP/USD and USD/JPY pairs. This means that GBP/JPY is related to either or both of the other pairs. The problem is they can move with each other and in the opposite direction. Plus, their correlation can change.
- Positive correlation – Occurs when pairs react in line with each other. GBP/USD, AUD/USD, and EUR/USD, the three most commonly traded pairs, are all positively correlated. That is because USD is the counter currency, and any change will impact all pairs
- Negative correlation – Takes place when currency pairs move in the opposite direction. USD/CHF, USD/JPY, and USD/CAD are excellent examples. This happens because the US dollar is the base currency
Correlation is a statistical measure ranging from -1 to +1. The former is when currency pairs move in opposite directions and the latter when they move together.
Calculation
The best way to understand how this knowledge can assist you day trading the GBP/JPY is to be the correlation calculator yourself. All you need is an Excel spreadsheet:
- Input price data from your currency pairs, GBP/JPY, for example
- Create two columns, one for each pair
- Fill the columns with the past daily prices over the period you are interested in
- Type =CORREL in an empty box at the bottom
- Highlight all the data in a column, and you will get a range of cells in the formula box. Type in a comma
- Now repeat steps 3 to 5 for the other currency
- Close the formula. It will then look like =CORREL (A1: A25, B1: B25)
The final figure is the correlation between the two currency pairs.
GBP/JPY Day Trading Strategy
Timing
Whether you opt for a breakout or scalping strategy, timing is essential. So, when is the best time to trade GBP/JPY? You want to focus your trading around key economic releases at 01:30, 02:00, 08:30, and 10:00 EST. Also, consider the Asian European overlap, which runs from 00:00 to 03:00 EST. This is when you will see the most liquidity for the Japanese yen, plus the European yen crosses.
Breakout Strategies
The volatility of the GBP/JPY means the pair can trade wide swings in either direction, making trading breakouts an appealing technique. You can capitalize on profits when big swings are correct and minimize losses when they move against you. A top tip is to regularly monitor your support and/or resistance lines and levels because the volatility can cause severe fluctuations in a short time frame.
20 Pips GBP/JPY Scalping Strategy
This method is straightforward. You use 5-minute time frames and free GBP/JPY signals. You will also need 25 exponential moving averages (EMAs) on the indicator front.
When the price is above 25 EMA, you are seeing an uptrend. When the price is below 25 EMA, it is considered a downtrend. The angle of the trend is essential. A relatively horizontal angle means the market is ranging. There is a solid trend if the angle is around 30 degrees or higher.
Buy Setup
- Moving average angle is 30 degrees or more
- The price has to be moving above the 25 EMA line
- Your buy signal is a bullish pin bar. So, buy at market price once the bullish pin bar closes
- Place your stop loss at least 10 pips under the low of the pin bar
- Your profit target will be 20 pips
Sell Setup
- Look for a moving average angle of 30 degrees or above
- Price should be moving below the 25 EMA line
- This time it is a bearish pin bar that is your sell signal. You should sell at market price once the bearish pin bar closes
- Again, opt for a stop loss of 10 pips above the high of the pin bar
- The profit target is also 20 pips
Because the range of the GBP/JPY can be anywhere from 150-200 pips a day, there is ample scalping opportunity. However, be warned this system may underperform in ranging, non-trending markets.
Trade Size
Whatever your strategy, the GBP/JPY can turn bullish or bearish quickly. You must set stop losses wide, with small lot sizes. You may even want to consider cutting your trade size to around a third. This allows you to aim for higher targets and reduce potential losses in a volatile currency pair.
Summing Up Strategy
One person’s best GBP/JPY strategy may not generate consistent profits for another investor. The trick is finding a strategy that compliments your trading style. Some focus on bar charts and daily pivot points, while others prefer economic calendars and news events.
For more guidance, see our strategy page.
History
Early History
The British pound is thought to be the oldest currency in the world still in use. A turning point came in 1940 with the Bretton Woods agreement. The pound pegged to the US dollar rate at £1 = $4.03. A system that was used to govern post-war exchanges for the next thirty years.
The Japanese yen, which means ‘circle’ or ’round object,’ is much younger than its British pound counterpart. The Meiji government introduced it in 1871 to replace the unstable Edo period, where no standard currency exchange existed. However, the yen lost its value during World War II. From 1949 to 1971, the yen was equivalent to 1 US dollar.
Global Credit Crunch
A critical period in the currency pair’s relationship was the global financial crisis of 2008. Between 2007 and 2009, the pound was clearly under pressure. In response to this, it weakened against the yen. GBP/JPY traded from a high of 250.13 to a low of 121.21, a staggering decline of over 50%.
Brexit
The Brexit decision of 2016 also had far-reaching implications. Although the repercussions were felt for less time than the crunch of 2008, volatility was still substantial. In June 2016, the GBP/JPY traded from a high of 160.66 to a low of 133.31.
Covid-19
To mitigate the effects of COVID-19, Japan authorized a US$1.1 trillion stimulus plan in May 2020. In addition, the BoJ bought ETFs and pumped huge amounts of yen and foreign currency into the financial markets.
The British government created a £30 billion stimulus package in August 2020. It included lowering interest rates to near-zero, financing £190 billion to companies, and buying £435 billion in government bonds. Throughout 2020, the pair traded between a high of 144.78 and a low of 127.55.
However, the all-time records for this currency pair weren’t at either of these periods. Instead, they were:
- All-time high – This was 1014.000 on 1st of January, 1963
- All-time low – 116.853 was recorded on the 19th of September 2011
Role of the Great British Pound
Before you start focussing on your GBP/JPY trading signals and system, it helps to have some context about the role these two currencies play.
Although the UK is relatively small in size, its economy is one of the largest in the world. It plays a leading role in international financial markets. London is thought of as the forex trading capital of the world.
The UK was at one time the global superpower, with the largest economy on the planet for over one hundred years. The British pound was considered the world’s unofficial reserve currency. However, the world wars sparked a decline. Stringent government regulations and restricted labor markets further impacted the economy.
The economy has since stabilized partially due to the UK’s role as a key global player in financial services.
Role of the Japanese Yen
Japan is one of the biggest economies in the world, boasting one of the highest GDPs, plus it is a huge exporter. However, it has had a challenging few decades. Low fertility rates and an ageing workforce have also made taxation and consumption a constant battle.
Despite troubles, their workforce is well-educated, and while industries such as shipbuilding have moved to China and South Korea, Japan remains a leading manufacturer of electronics and technological components. Japan is now heavily reliant on China as a trade partner.
The main driving forces are interest rates and price action. However, there are other economic data releases that traders should keep an eye out for:
- GDP data
- Retail sales
- Inflation data
- Trade balances
- Industrial production
- Employment rates
- Central bank policies
Google Finance, Yahoo Finance, Bloomberg, and Reuters are good GBP/JPY news resources. For truly yen-specific information, the Tankan survey is particularly useful. This is published quarterly online by the BoJ.
Final Word on GBP/JPY Day Trading
The GBP/JPY is thought of as a gauge for global economic health, as it reflects issues affecting both Western Europe’s monetary policies and those in the Asia-Pacific region. Phenomenal volatility and wide trading ranges attract vast numbers of day traders.
Success will be no easy challenge when you open up your live forex chart. You will need an understanding of how and what influences each currency and economy, fundamental analysis, charts, patterns, and the news to spot potential opportunities. Only then can you begin your journey to join the likes of famous forex traders, Ed Seykota and Richard Dennis.
For more guidance, see our forex trading page.
FAQ
What Does GBP/JPY Mean?
GBP stands for Great British pound and JPY for Japanese yen. GBP/JPY is the forex exchange pair these two currencies generate. With it, you can speculate on the price movement between GBP and JPY.
Is GBP/JPY A Good Pair To Trade?
The pair is highly volatile and suitable for investors who can manage such conditions. Volatility is great for day or short-term trading as it offers plenty of opportunities to take advantage of the price fluctuations.
What Is The Best Time To Trade GBP/JPY?
GBP/JPY moves the most when the London and the Japan markets are opened at the same time, between 03:00 and 04:00 EST. This creates liquidity and substantial price movements.
Why Is The GBP/JPY Highly Volatile?
Both GBP and JPY are highly volatile currencies; when combined, this results in an exciting pairing. GBP/JPY is also tied to distinct types of economies, which creates big up and down swings in price. The pair also has ample liquidity due to its popularity.
What Affects GBP/JPY?
Some of the most impactful factors include energy prices and government policies. Japan is a big importer of crude oil and natural gas. JPY is highly dependent on the cost of energy. The UK is one of the most influential economies in the world. Its policies often have a knock-on effect on regional and international markets.