In a week marked by central bank decisions and geopolitical developments, the British Pound (GBP) has managed to carve out fresh gains against the Japanese Yen (JPY), with the GBP/JPY currency pair climbing above the psychologically significant 197.00 threshold and reaching a weekly high of 197.75 during Thursday’s early U.S. trading session. At the time of writing, the pair is up by 0.47%, its third consecutive daily advance.

The rally in the Pound comes in the wake of a landmark policy decision by the Bank of England (BoE), which cut its benchmark interest rate by 25 basis points to 4.00% — the lowest level since March 2023. Although the move was broadly anticipated by financial markets, the way the decision unfolded surprised many observers and revealed deep divisions within the Monetary Policy Committee (MPC).

In a highly unusual twist, the committee was forced to conduct a second round of voting after the initial decision ended in a deadlock. The first vote came in at 4-4-1, with four members in favor of keeping rates steady, another four supporting a quarter-point cut, and the swing vote, Alan Taylor, calling for a more aggressive 50bps reduction. However, in the second round, Taylor moderated his stance and backed the smaller 25bps cut, allowing the policy change to pass narrowly with a 5–4 majority.

The split decision underscores the level of uncertainty clouding the BoE’s outlook. In its accompanying Monetary Policy Report, the central bank admitted that underlying economic activity remains sluggish, with slack emerging in key sectors of the economy. Nevertheless, it also acknowledged that recent trade policy clarity has somewhat reduced external uncertainty, providing a mildly firmer backdrop for monetary policy.

Governor Andrew Bailey adopted a notably measured tone during his post-decision press conference. “Interest rates are still on a downward path, but any future cuts will need to be made gradually and carefully,” Bailey said. He reiterated the BoE’s data-dependent approach, emphasizing that persistent risks from second-round inflationary effects — particularly from wage growth — remain on the bank’s radar.

Bailey further warned against moving too quickly on the rate-cutting path: “It’s important that we do not cut Bank Rate too quickly or too much.” He noted that while headline inflation may edge higher in the near term, it is expected to be temporary, driven mainly by base effects. The BoE now forecasts headline inflation to rise to 4.0% by September, up from a prior projection of 3.7%, before gradually falling back toward the 2% target.

Despite the rate cut, the Pound’s resilience suggests that market participants interpreted the central bank’s message as one of cautious easing, rather than a signal of aggressive monetary accommodation. Traders have since scaled back their expectations for additional cuts this year. Futures markets are now pricing in only 17bps of further easing for 2025, down from 25bps previously.

This shift in expectations has helped lift GBP/JPY, which continues to benefit from a favorable yield differential amid lingering weakness in the Japanese Yen.

The Yen, on the other hand, has been weighed down by a combination of domestic uncertainty and fresh geopolitical developments. Sentiment took a hit after reports surfaced suggesting U.S. President Donald Trump is considering imposing an additional 15% tariff on all Japanese imports — a move that would significantly escalate trade tensions between the two long-standing allies.

This potential trade escalation has amplified pressure on the already vulnerable Yen, which has been struggling amid mixed signals from the Bank of Japan (BoJ). Last week, the BoJ kept interest rates unchanged, even as it raised its inflation outlook. However, the central bank stopped short of committing to further tightening, citing downside risks tied to global trade and weak domestic consumption.

Minutes from the BoJ’s June policy meeting revealed that several members remain open to additional hikes if external conditions stabilize, but for now, a cautious stance appears to dominate. The result is a widening divergence in monetary policy between the UK and Japan — a key factor underpinning the GBP/JPY rally.

From a technical perspective, the GBP/JPY pair has capitalized on bullish momentum supported by favorable signals from key indicators. The pair decisively broke through resistance at 195.70 and climbed past the 61.8% Fibonacci retracement level at 197.45, clearing the way for additional gains.

Should buying pressure persist, traders could see the pair testing the next upside targets at 198.25 and potentially 200.00. However, a failure to maintain momentum above 197.45 could lead to mixed price action, with the possibility of a pullback to retest the 195.70 level.

For now, the near-term bias remains bullish, with today's expected trading range seen between 196.20 and 197.90.

BUY GBPJPY

ENTRY PRICE: 197.70

STOP LOSS: 196.70

TAKE PROFIT: 200.00

USDCAD has declined for five consecutive sessions and is trading near 1.3720 in the European morning. Near-term direction hinges almost entirely on the upcoming labour data.

Consensus expects Canada to have added just 13,500 jobs in July, a sharp slowdown from June's outsized 83,100 gain. The unemployment rate is forecast to tick up to 7.0% from 6.9%, reinforcing concerns that the economy is losing momentum.

The BoC has stood pat at its last three meetings, reiterating that rate cuts will only be considered if economic slack continues to widen. June's robust print—particularly the 83,000 headline jump—gave policymakers breathing room to remain on hold. Friday's release therefore carries outsized significance for the forward policy path.

A soft report would likely bring forward market pricing for a first cut later this year. Conversely, another strong set of numbers would restrain easing expectations and open the door for renewed CAD strength.

USDCAD remains within an ascending channel drawn from the July low at 1.3538, but intraday price action has drifted toward the mid-line, where it is finding interim support.

Initial support is located around 1.3729, coinciding with the 61.8% retracement (1.3670) of the June–July advance. A decisive break below this zone exposes the prior low at 1.3538.

The Elliott-wave structure suggests the three-wave rebound from 1.3538 topped at 1.3878. The current pullback may mark the onset of a larger impulsive decline. That bearish bias would be invalidated on a sustained move above 1.3818, shifting the technical outlook back to neutral—or even short-term bullish.

Trading Direction: Sell

Entry Price: 1.3765

Target Price: 1.3568

Stop Loss: 1.3820

Valid Until: August 22, 2025, 23:55:00

Support: 1.3729/1.3706/1.3689

Resistance: 1.3758/1.3774/1.3810

New Zealand's Q2 labour-market report confirms a continued softening in employment conditions. The employment ratio slipped 0.1% MoM, while the unemployment rate ticked up to 5.2%—the highest since 2020, yet marginally below the 5.3% consensus. Labour-force participation fell 0.2% to 70.5%, its lowest print since early-2021, signalling cooling demand.

Wage dynamics sent mixed signals to the Reserve Bank of New Zealand (RBNZ). The private-sector Labour Cost Index (LCI) rose 0.6% MoM, topping both the 0.5% forecast and Q1's 0.4 %, but annual wage inflation eased from 2.5% to 2.2%—a three-year low—suggesting underlying wage pressures are moderating.

The RBNZ's August expectations survey indicates policymakers will likely deliver only one more cut in 2025, with a cautious outlook thereafter. The market-implied Official Cash Rate (OCR) is seen sliding from 3.25% to 3.02% by September 2025, consistent with a single 25 bp reduction at this month's meeting. By June 2026 the OCR is projected at 2.86%, implying a possible further trim in H1-2026, though the timing remains highly uncertain.

Inflation expectations continue to drift lower. One-year-ahead CPI is forecast at 2.37% (down from 2.41%), while the two-year outlook is virtually unchanged at 2.28%. Wage-inflation expectations are mixed: the one-year gauge eased to 2.61%, whereas the two-year measure rose to 2.88%—a sign that markets remain confident wage pressures will not reignite medium-term inflation risks.

Unemployment expectations also improved marginally, with the projected jobless rate revised down across all horizons. Despite anaemic growth, respondents pencil in GDP expansion of 1.66% over the coming year and 2.16% the following year.

Taken together, the survey paints a picture of a gradual, front-loaded easing cycle: one cut later this year, followed by an extended pause.

EURNSD has been oscillating in a tight range just below the psychological 1.9600 handle, preserving its constructive uptrend in a classic high-level consolidation pattern. Robust Euro-zone macro data has underpinned the single currency’s stabilization, while the RBNZ elected to hold the Official Cash Rate steady at 5.50% flagging downside risks to growth.

From a technical perspective, a decisive, volume-backed breach of the 1.9700 resistance would open the path upward. Momentum oscillators remain supportive, yet they must guard against a high-level reversal, as a double-top formation is taking shape.

Trading Direction: Sell

Entry Price: 1.9628

Target Price: 1.9075

Stop Loss: 1.9759

Valid Until: August 22, 2025, 23:55:00

Support: 1.9550/1.9493/1.9410

Resistance: 1.9646/1.9681/1.9710

AUD/USD surged during the European session, climbing to trade around 0.6540 as investors digested robust Australian trade data and a weakening US Dollar driven by growing Federal Reserve dovishness. The pair's gains reflect a confluence of domestic strength and global monetary policy repricing, pushing the Aussie higher against its G10 counterparts.

The move was triggered primarily by the Australian Bureau of Statistics' latest report, which showed that Australia’s trade surplus soared to AUD 5.365 billion in June, smashing consensus estimates of AUD 3.25 billion. This marked a substantial rebound from May’s revised reading of AUD 1.604 billion (initially reported at 2.238 billion). Export volumes surged by 6.0% on the month, boosted by strong commodity demand and improving prices, while imports slipped 3.1%, pointing to slower domestic consumption or seasonal shifts.

For currency markets, the trade data was a bullish signal for the Australian Dollar. A widening surplus typically implies greater foreign demand for Australian goods and services, driving capital inflows into the country and by extension, demand for the local currency. This comes at a time when the AUD had already been showing signs of relative strength, making Friday's rally more of a continuation than a reversal.

From a macroeconomic perspective, the robust trade surplus not only points to economic resilience but also complicates the Reserve Bank of Australia’s (RBA) policy path. While markets are pricing in a 25 basis point rate cut at Tuesday’s policy meeting—potentially lowering the Official Cash Rate from 3.85% to 3.6%—the strength in external demand may force the RBA to consider a more cautious easing stance. Inflation has eased from its peak, but sticky service sector prices and now a solid external position could delay deeper monetary accommodation.

"This trade print throws a bit of a curveball at the RBA," said one Sydney-based economist. "While the central bank wants to ease in the face of global slowdown concerns, the numbers we’re seeing today suggest the economy is not exactly screaming for stimulus."

On the other side of the pair, weakness in the US Dollar has added further fuel to the AUD/USD upswing. The US Dollar Index (DXY), which tracks the greenback against six major currencies, slipped toward the 98.00 mark—a multi-week low—as investors ramped up bets on an imminent Fed rate cut.

This decline in the dollar is being driven by a growing number of Federal Reserve officials publicly advocating for rate reductions, citing increasing signs of weakness in the US labor market. Recent data has shown softening job openings, rising continuing unemployment claims, and weaker-than-expected wage growth—all of which feed into the narrative that the US economy may be losing steam faster than previously expected.

The Fed's shift in tone has been unmistakable over the past two weeks,Markets are now pricing in a rate cut as early as the next meeting, which has kneecapped the dollar and sent high-beta currencies like the Aussie flying.

Technically, the AUD/USD pair is showing strong bullish momentum. The price closed higher in the latest intraday session, supported by a positive short-term trend above the 50-day exponential moving average (EMA50). The pair is also trading along a rising trendline, reinforcing the bullish structure. The Relative Strength Index (RSI) has entered overbought territory, suggesting some potential for near-term consolidation, but the broader bias remains upward for now.

From a chartist's perspective, the next resistance lies near 0.6600, with support forming around the 0.6485 level. A sustained break above resistance could open the door to further upside, especially if the RBA surprises with a more hawkish tone next week or if the Fed narrative continues to tilt dovish.

BUY AUDUSD

ENTRY PRICE: 0.6520

STOP LOSS: 0.6480

TAKE PROFIT: 0.6600

In the UK, the market widely expects the Bank of England to cut its benchmark interest rate from 4.25% to 4% in today's decision, marking the fifth rate cut this year and highlighting its cautious stance in balancing employment and inflation. Although the UK's consumer price index (CPI) remained at 3.6% in June, well above the 2% target, a weak labor market and increased employer taxes are putting pressure on economic growth prospects. There is internal disagreement within the Bank of England regarding further rate cuts, and it is expected that the remaining part of the year may see a gradual easing of monetary policy.

In Japan, the Bank of Japan maintained its risk-free interest rate at 0.5% during its July 30–31 interest rate meeting, but raised its core inflation forecast for the current fiscal year from 2.2% to 2.7%. It also made its first forecast in the third quarter outlook that core inflation would fall back to 2.0% in fiscal year 2027, suggesting that it would begin a cycle of interest rate hikes when conditions are suitable. Tokyo's core CPI (excluding fresh food and energy) still recorded a year-on-year growth rate of 3.1% in July. Although real wages have declined for six consecutive months, the sustained rise in food prices has led the government to maintain a cautiously optimistic stance on inflation.

From the daily chart, the GBP/JPY pair is oscillating around 196.60; the key support level is located in the range of 194.40–193.90, and a break below this level could extend the decline to around 193.00. The initial resistance level is at 197.17–198.10. A break above this level could target the integer level 200.00, and there is even potential for a break above 200.00.

Currently, the candlestick chart for the GBP/JPY pair shows signs of forming a head-and-shoulders top pattern. If today's closing price is weak, the right shoulder may form, which will make the short-term trend more likely to decline.

Trading direction: Sell

Entry price: 196.70

Target price: 193.50

Stop loss: 197.30

Expiration date: 2025-8-21 23:00:00

Support: 195.02, 194.01

Resistance: 197.17, 198.10

Recently, personnel changes in the US political arena have drawn market attention. US President Trump confirmed this week that he will nominate new members to the FOMC to replace the Federal Reserve board member who resigned last week. The market generally believes that Trump will recommend candidates who lean toward a more accommodative stance, thereby pushing the Federal Reserve to restart its interest rate cut cycle. Additionally, Trump revealed in a media interview that he has narrowed down the list of candidates for Federal Reserve chair to four, including White House economic advisor Kevin Hassett and former Federal Reserve board member Kevin Warsh, which sends a strong signal of a policy shift. Given Trump's consistent criticism of the current interest rate policy, analysts believe that if the aforementioned "dovish" candidate eventually takes over the FOMC, they will significantly increase the probability of rate cuts, which will be structurally favorable for silver. Meanwhile, Trump recently mentioned plans to impose new tariffs on the "semiconductor, chip, and pharmaceutical industries", sparking a rise in market risk aversion. Although the equity market remains in a rebound phase, the relative appeal of safe-haven assets has increased, with both gold and silver attracting safe-haven capital.

Despite rising US Treasury bond yields, the dollar remained weak as investors shifted their focus to escalating political risks related to the upcoming Federal Reserve nomination. President Trump confirmed that a decision on the replacement for outgoing Federal Reserve Governor Adriana Kugler is imminent. Before the full implementation of tariffs and interest rate cuts, the dollar continues to fluctuate.

From the hourly chart perspective, the Bollinger Bands are widening upward, the moving averages are diverging upward, and the price is continuously rising along the upper band of the Bollinger Bands, indicating strong upward momentum. However, the MACD histogram is starting to weaken, and the RSI reading is 66, approaching the overbought zone. If the price fails to accelerate and break the previous high of 39.53 at this level, a pullback is possible. If it breaks through decisively, it will open up further upside potential, potentially breaking the key resistance at 40 and even reaching 50. From the daily chart perspective, there is a possibility of a golden cross forming in the MACD. If it forms, it will accelerate the upward trend. If not, it may form a death cross above the 0 axis, along with a potential head-and-shoulders top pattern. The RSI value is 56, which has not yet reached the overbought zone. The key is whether resistance is encountered near the upper Bollinger Band, with the price currently around 39.4. For the strategy, it is recommended to go short at highs.

Trading direction: Sell

Entry price: 39

Target price: 36.3

Stop loss: 39.6

Support: 37.8, 36.8, 36

Resistance: 38.5, 39.4, 40