Yen is crashing! Why? GBP/JPY trades examples

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 Hello traders, if you trade the forex market, you’ve definitely seen the Japanese yen fall. Most XXX/JPY pairs have exploded to the upside over the past month. Here’s an example on some yen pairs:



Why is the yen so weak right now?

The catalyst was at first political. Everything began with the recent election for Japan’s new Prime Minister Sanae Takaichi, followed closely by the most recent Bank of Japan (BOJ) meeting.


The market expected a more aggressive, proactive stance against inflation and yen weakness. 


Instead, the new leadership signaled:

  • More fiscal expansion under Sanae Takaichi
  • No immediate urgency to address the weak yen
  • More support for domestic consumption instead of currency stability


Fiscal expansion weakens the currency (larger deficits, more borrowing, more stimulus). Combine that with a cautious central bank → investors sell JPY.



At the last BOJ meeting, Rates were left unchanged (as expected). Two board members dissented and voted for a hike but Governor Ueda emphasized that wage growth is still not strong enough and that the next hike could be delayed to January… or even March 2026. Markets interpreted this as: “No urgency. More delay. More yen weakness ahead.” That patience = JPY selling pressure.



The Economic Datas are Strong… But Not Strong Enough to Force a Hike. Japan recently delivered a batch of economic data:

  • Retail sales resilient
  • Labour market solid
  • Factory output temporarily improving
  • Tokyo inflation remains well above the 2% target


This supports the case for a rate hike but does not force the BOJ into immediate action.


Markets Expect a Hike — But Not Anytime Soon

  • 66% probability of no change at the next BOJ meeting
  • A rate hike is priced either late December or early 2026


The Market Narrative Right Now

At this moment:

  1. Fiscal policy (Takaichi) = yen-negative
  2. BOJ caution = yen-negative
  3. Strong data but no hike = yen-negative
  4. Carry trades back on = yen-negative
  5. Next hike pushed to 2026 = yen-negative


Everything points in the same direction.


In the short term, the only thing that could stop this, would be a direct BOJ intervention. We’ll see what happens.


To finish, as a GBP/JPY trader this narrative is perfect for me because i’m able to find amazing opportunities. When there’s a trend like this, it’s our job as traders to make sure we make some profit off of it while it last. Here’s are some trades that I’ve taken and other amazing opportunities that presented themselves on GJ:



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