On Thursday, the GBP/JPY pair showed a sharp downward reversal while continuing to trade near the record high reached on Wednesday — the highest level since July 2024. Current spot quotes are below the 207.00 level, with a daily decline of 0.10%, although short-term trends still favor market participants expecting further price increases.

Market players remain cautious due to the potential intervention by Japanese authorities to support the national currency. This, along with renewed expectations of a Bank of Japan interest rate hike in December, contributes to moderate strengthening of the Japanese yen and triggers intraday selling in the GBP/JPY pair.

Bank of Japan Board Member Asahi Noguchi confirmed today that if economic activity and prices evolve in line with forecasts, the central bank will gradually adjust the degree of monetary support. In addition, Japan's Services Producer Price Index indicates inflation approaching a stable 2% target, highlighting the need for further tightening by the Bank of Japan.

However, the prevailing risk-on sentiment and concerns about Japan's worsening financial health — amid the stimulus-oriented stance of Prime Minister Sanae Takaichi — limit the yen's gains as a safe-haven asset. The British pound, by contrast, is strengthening thanks to the UK budget, which includes a larger-than-expected fiscal buffer, supporting the GBP/JPY pair.

Still, growing expectations of an interest rate cut by the Bank of England next month contrast sharply with the Bank of Japan's increasingly hawkish plans. This may discourage traders from opening new long positions in the GBP/JPY pair. The market's focus now shifts to the upcoming release of fresh consumer inflation data from Tokyo, scheduled for Friday during the Asian session.

From a technical perspective, oscillators on the daily chart are positive but close to overbought territory, suggesting a possible correction. The pair has found support at 206.40, with the next support at the round level 206.00. Resistance lies just above the round level 207.00, near the annual high.