Why Did GBP/JPY Crash After Hitting 34-Year High? | Analyzing the Sudden 700-Pip Drop

GBP/JPY's Rollercoaster Ride: From Historic Highs to Sharp Reversal

The Next crypto to hit The foreign exchange markets witnessed extraordinary volatility this week as the GBP/JPY currency pair (affectionately called "Guppy" by traders) made headlines with its wild price action. After climbing to 200.60 - its highest level since 2008 - the pair suddenly reversed course, shedding nearly 700 pips before stabilizing around the 196.00 support level.

What Triggered the Dramatic JPY Movement?

Market participants widely suspect the Bank of Japan (BoJ) executed covert currency interventions during Japan's Showa Day holiday. While official confirmation remains pending, multiple financial sources report unusual trading patterns consistent with central bank activity. The Yen's simultaneous weakness across all major currency pairs lends credence to these reports.

This intervention comes at a delicate time for Japanese monetary policy. With the BoJ gradually moving away from its ultra-loose stance, currency markets remain hypersensitive to any signs of policy shifts. Traders should note that Japan's market holidays (Constitution Day and Children's Day) may create additional liquidity gaps this week.

Technical Perspective: Where Next for GBP/JPY?

Monday's trading session produced one of the widest daily ranges in GBP/JPY history. The pair's failure to sustain levels above 200.00 suggests strong resistance at psychological round numbers. Key observations from the technical landscape include:

• The 200-day EMA sits far below at 185.16, representing a potential safety net
• Price action shows consolidation near 196.00, a historically significant level
• Despite the pullback, monthly charts maintain a bullish bias

Upcoming Market Catalysts

With limited economic data from both the UK and Japan this week, attention turns to:

• BoJ Meeting Minutes (Thursday release)
• Bank of England rate decision and Monetary Policy Report (next Thursday)
• Potential follow-up intervention signals from Japanese authorities

Seasoned traders know that such extreme volatility often precedes extended consolidation periods. The coming sessions will reveal whether this marks a temporary pause in GBP/JPY's bull run or the beginning of a more substantial correction.