Tracking Forex pairs: what GBP/JPY can tell us about the global economy

Even in South Africa, GBP/JPY is a common choice among active traders, largely because of its strong price movements and liquidity. Yes, there are other, perhaps safer options like gold and USD/ZAR, but GBP/JPY stands out for those looking for faster-paced opportunities. 

Not only this, but GBP/JPY can actually inform trading strategies across multiple markets, mainly because of what it tells us about the global economy. So what does it tell us, and how can you use that information to your advantage?

What GBP/JPY Can Tell Us About the Global Economy

Put simply, GBP/JPY tells us exactly how global investors are feeling about risk at any given moment. Looking at the GBPJPY live price on Exness right now, for instance, you can see whether traders are leaning towards risk-on or risk-off sentiment. 

If the pair is climbing steadily, it indicates growing confidence in riskier assets – often reflecting optimism about the UK economy or broader global growth – and if there’s a sharp decline, that indicates investors are moving into safer havens like the Japanese yen – often reflecting uncertainty or caution in global markets. 

The reason this is the case is because of the unique economic roles and investors’ perceptions attached to both currencies in the pair. The British pound is widely considered a risk-sensitive currency: it tends to appreciate when investors feel confident about economic growth or higher interest rates. 

The Japanese yen, on the other hand, has earned a reputation as a safe-haven currency: it tends to remain stable or even strengthen during periods of global uncertainty or market stress. 

Essentially, when investors are optimistic, they move capital into riskier assets, including the pound, seeking higher returns, which ultimately push GBP/JPY higher. On the other hand, during periods of global uncertainty, investors flock to safety, buying yen and selling pounds, which drives the pair down. 

In this way, upward movements reflect risk-on sentiment and global confidence, while downward movements signal risk-off and a flight to safety. 

How to Use This Information Across Markets

As we mentioned before, tracking GBP/JPY isn’t just useful for forex traders – it can provide meaningful insight for your entire portfolio across multiple asset classes. 

The reason for this is simple: the currency pair acts as a real-time benchmark of global investor sentiment and economic health, and sentiment is a primary driver of asset prices worldwide. By knowing whether investors are risk-on or risk-off, then, you can make your decisions far more informed across equities, commodities, bonds, or any other currencies. 

Let’s say, for instance, you’re applying a 5 minute scalping strategy in crude oil on a platform such as Exness. Even though oil isn’t a currency, its price is going to react strongly to shifts in global risk sentiment. If GBP/JPY is climbing steadily – signalling a risk-on environment – it’s going to be easier to anticipate short-term bullish momentum in crude oil as traders move into riskier assets. 

Conversely, if GBP/JPY suddenly drops sharply, it could indicate an imminent risk-off move, meaning crude oil prices might experience a rapid decline. By monitoring the forex pair alongside your scalping charts, you effectively gain an early warning system. 

Because the pair reacts almost instantly to changes in global sentiment – often before other markets fully price in these shifts – you can adjust your entries and exits quickly, confirming the strength of trends and avoiding false signals without having to rely solely on price action in the commodity itself. 

That’s not to say it’s the only indicator. On the contrary, if you’re only relying on GBP/JPY sentiment to make your scalping decisions, you risk being caught off guard by short-term noise or reversals. But if you use it alongside solid technical analysis and the best indicators – such as moving averages, RSI, or Bollinger Bands – it can help you gauge momentum and provide some macro-level context to your decisions.

Tracking GBP/JPY Effectively

So how do you track it? The first thing you need to do is combine real-time chart analysis with a clear understanding of global and regional factors that influence both currencies. For instance, you should:

• Use A Reliable Trading Platform

We mentioned the Exness platform before, and this is one of the best for monitoring price movements and accessing technical indicators with live spreads. Whichever platform you use, however, you need to make sure it’s fast, reliable, and offers real-time data, as delays of even a few seconds can make a big difference when trading such a volatile pair.

•  Monitor Key Economic Releases

You should also keep an eye on UK and Japanese economic data, such as interest rate decisions, inflation figures, recent GDP reports, and employment statistics. These can create sharp moves in GBP/JPY, and potentially trigger sudden breakouts or reversals that can make or break a trade.

• Use Risk Sentiment Indicators

Risk sentiment tools will be useful, not only because they signal whether investors are moving into risky or non-risky assets, but also because they help anticipate short-term market reactions. Global equity indices and safe-haven flows into yen can also help you anticipate how risk-on or risk-off sentiment might influence the pair, helping to align your trades with the broader market trend and avoid false signals.

• Use Technical Indicators

Speaking of indicators, momentum tools like RSI and MACD will also be important, as they can help to identify trends, overbought/oversold levels, and potential reversal points – all of which will be crucial for tracking the pair effectively and timing your entries and exits.

• Stay Informed on Geopolitical Events

Events like elections, recent trade negotiations, or any geopolitical tensions will have an impact on rapid movements, so make sure you track these too to ensure you’re not blindsided, and you know exactly what might be about to shift the market up or down.

Conclusion

There are other things you need to think about, such as support/resistance levels, trading volume, and multiple timeframes, but so long as you understand how global economic trends are going to affect the pair, you’ll be able to track GBP/JPY effectively and make more informed decisions in that market and beyond.