The Japanese Yen (JPY) has shown relative strength against both the Australian Dollar (AUD) and the British Pound (GBP) amid heightened geopolitical uncertainties and shifting risk sentiment. The AUD/JPY cross slipped to around 114.00 during the early European session on Friday, trading in negative territory as the Australian Dollar softened due to a lack of progress in reopening the Strait of Hormuz. Despite this decline, the AUD/JPY pair maintains a bullish structure above its 100-day Simple Moving Average (SMA), with technical indicators such as a moderately positive Relative Strength Index (RSI) around 57 suggesting steady upside momentum. Immediate resistance is noted at the upper Bollinger Band near 114.95, while support lies at the middle band around 113.80 and the 100-day SMA at 110.27 [1].
Meanwhile, the GBP/JPY cross has drifted lower for the second consecutive day, falling below the 212.00 mark and reaching a one-and-a-half-week low during the Asian session on Friday. The pair has found acceptance below the technically significant 100-day SMA, indicating vulnerability to further declines. The British Pound's underperformance is attributed to the deepening UK political crisis, highlighted by the resignation of Health Minister Wes Streeting and mounting pressure on Prime Minister Keir Starmer following significant losses for the Labour Party in local elections. Persistent geopolitical uncertainties have bolstered the JPY's safe-haven appeal, further weighing on GBP/JPY. However, JPY bulls remain cautious due to concerns about economic risks from Middle East tensions, as evidenced by Japan's Producer Price Index (PPI) surging 4.9% year-over-year in April amid rising oil and import costs linked to the Iran war [2].
Speculation persists that Japanese authorities may intervene to prevent further depreciation of the Yen against the US Dollar, but the technical and fundamental backdrop currently favors further losses for GBP/JPY. Any attempted recovery in the pair is likely to be met with selling pressure in the absence of significant macroeconomic data. On the day, the British Pound was the strongest against the New Zealand Dollar but showed weakness against the JPY and other major currencies [2].
Market participants are closely monitoring ongoing geopolitical developments, particularly the high-stakes summit between US President Donald Trump and Chinese President Xi Jinping, as well as potential interventions by Japanese authorities, for further direction in these currency pairs [1][2].
CONCLUSION
Both AUD/JPY and GBP/JPY have come under pressure as the Japanese Yen benefits from its safe-haven status amid geopolitical tensions and domestic political instability in the UK. While AUD/JPY retains a bullish technical structure, GBP/JPY appears vulnerable to further declines. Market sentiment remains cautious, with traders watching for geopolitical developments and possible policy actions from Japanese authorities.