The Japanese yen remains under pressure across major pairs as wide interest rate gaps drive flows into higher-yielding currencies. Despite a modest BoE rate cut in August, UK yields stay well above Japan's, while the ECB holds steady and the Fed eyes a 25 bp cut. Against this backdrop, GBP/JPY, EUR/JPY, and USD/JPY remain elevated, with traders watching upcoming central bank decisions and global risk sentiment for the next move.
The Japanese yen remains under pressure across major pairs as wide interest rate gaps drive flows into higher-yielding currencies. Despite a modest BoE rate cut in August, UK yields stay well above Japan's, while the ECB holds steady and the Fed eyes a 25 bp cut. Against this backdrop, GBP/JPY, EUR/JPY, and USD/JPY remain elevated, with traders watching upcoming central bank decisions and global risk sentiment for the next move.
GBP/JPY – Pound Holds Firm Despite BoE Rate Cut
The British pound remains strong against the yen, even after the Bank of England cut rates by 25 basis points in August, bringing the Bank Rate down to 4%. Policymakers signaled a cautious approach to further cuts, stressing that decisions will remain data-dependent.
The Bank of Japan, meanwhile, continues to keep its policy rate near 0.5% with no signs of tightening. The wide gap between UK and Japanese rates keeps sterling attractive, supporting GBP/JPY near multi-year highs.
What to Watch:
- UK inflation and wage data, which could influence whether the BoE cuts again.
- Any hints from Japan about future policy changes.
- Risk sentiment — the yen tends to benefit if global markets turn risk-off.
Outlook: GBP/JPY is steady above 200. If momentum holds, it could move toward 201.749–204.159. A drop below 198.794 would suggest a deeper pullback.
EUR/JPY – Euro Benefits From Stable Inflation
The euro is also strong against the yen. The ECB kept interest rates unchanged at 2.15% in September but projects inflation close to its 2% target over the medium term. That gives the ECB less pressure to cut rates aggressively.
Japan's ultra-loose policy stance continues to weigh on the yen, making the euro relatively more attractive.
What to Watch:
- Eurozone inflation and growth outlook.
- Japan's handling of yen weakness and imported inflation.
- Global demand for European exports.
Outlook: EUR/JPY has support around 172.125. A break above 173.904 could open the door to 175.003 - 176.782.
USD/JPY – Dollar Supported by Yield Gap
The U.S. dollar remains strong against the yen ahead of the Fed's September 17 meeting, where a 25-basis-point rate cut is expected. Even with that move, U.S. interest rates are far above Japan's, keeping the dollar supported.
Unless the BoJ signals a meaningful policy shift, the yen is likely to stay under pressure. However, if global markets turn risk-off, the yen could see safe-haven demand.
What to Watch:
- The Fed's September 17 decision.
- BoJ policy signals.
- Global risk sentiment.
Outlook: USD/JPY is holding above 147, with potential to test 149.128. First support is near 146.300.
Final Thoughts
As of September 15, 2025, the yen remains weak across major pairs due to Japan's ultra-low interest rates. GBP/JPY stays elevated despite the BoE's August rate cut, EUR/JPY benefits from stable inflation in the euro area, and USD/JPY reflects the wide gap between U.S. and Japanese yields. Central bank meetings this week — especially the Fed's — could decide whether these moves extend further or pause for a pullback.