Created on September 09, 2026

The GBP/JPY pair has dropped significantly, only to turn things around and show signs of life again.

GBP/JPY

The British pound initially fell against the Japanese yen as we continued to see a lot of carry trade unwind around the world, but it has turned back around later in the day. Perhaps the Japanese yen got a little bit ahead of itself.

So as we head toward a Bank of Japan interest rate decision late next week, we also have to keep in mind that the interest rate differential is going to continue to be a big driver over the longer term.

The question is whether or not we have seen the carry trade unwind finish, or whether the market still has further to go.

The hammer that we are forming for the session is a good look. So we’ll see. I’ll be watching the 210 yen level for a potential breakaway to the upside.

A breakdown below the bottom of the candlestick for the day would be very negative. It could open up the pound to drop down to the 205 yen level.

Overall, this is a market that is being heavily influenced by the Bank of Japan and its intervention. And the question now is whether or not that intervention continues.

This isn’t the primary pair. The primary pair is dollar-yen, but this still has that huge interest rate differential. And even if the Bank of Japan does raise rates, it only makes a slight difference.

It certainly is a market that has been manipulated. That’s nothing new via intervention. But from a longer-term standpoint, not much has changed.

Maybe the British pound softens a little bit, and maybe the next high isn’t at 220 yen like we had seen at one point.

But the interest rate differential continues to be supportive, although that has deteriorated over the last couple of weeks.

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Christopher Lewis is a technical analyst and market commentator at DailyForex with more than two decades of trading experience in Forex and other leveraged markets. Based in Columbus, Ohio, he specializes in chart-based analysis of major currency pairs, stock indices, commodities, and energy markets, focusing on clear support and resistance levels, trend structure, and risk management. Christopher produces daily written and video analysis for traders who rely on technical setups to navigate volatile market conditions

As seen on: Pairs Of Aces Podcast,The Trader Guy, FXEmpire