GBP/JPY hits new YTD high above 199.00 as US tariff threat weakens Yen

• GBP/JPY reaches a fresh year-to-date high of 199.48.
• US tariff threats against Japan weigh on the Japanese Yen.
• Overbought signals and wedge resistance suggest a limited upside for GBP/JPY in the near term.

The British Pound (GBP) reached a new YTD high against the Japanese Yen (JPY) on Tuesday as United States (US) tariff threats on Japan weighed on the JPY.

At the time of writing, GBP/JPY is trading above 199.00 after reaching a high of 199.48 in the European session.

The Trump Administration sent Japan a formal letter on Monday informing them that Japanese imports to the US will face a 25% tariff charge from August 1.

At a conference in Tokyo on Tuesday, Japan's Prime Minister Shigeru Ishiba emphasized Japan's intent to continue talks to prevent escalation and protect bilateral trade ties.

Meanwhile, Japan's top trade negotiator, Ryosei Akazawa, reiterated that "There's no point striking a deal with the US without an agreement on automobile tariffs." 

The US tariff threats against Japan are making the Yen less attractive, helping the GBP/JPY pair move higher.

Although the three-week tariff extension offers Japan a limited window to finalize a trade agreement with the United States, existing tariffs are already weighing on the Japanese Yen.

GBP/JPY holds firm above 199.00 as the RSI nears oversold territory

GBP/JPY is trading near 199.20 on Tuesday, maintaining its bullish trajectory within a well-defined ascending wedge pattern. 

The pair has benefited from sustained Japanese Yen weakness amid renewed trade tensions with the United States, which have eroded demand for the Yen as a safe haven. 

Price action is firming above the 199.00 psychological level, providing imminent support for the pair.

With the Relative Strength Index (RSI) hovering around 62, the market is approaching overbought territory, suggesting the potential for short-term consolidation or a pullback.

GBP/JPY daily chart

With the Relative Strength Index (RSI) hovering around 62, the market is approaching overbought territory, suggesting the potential for short-term consolidation or a pullback. Immediate support is seen at 198.81, followed by the 10-day and 20-day Simple Moving Averages at 197.91 and 197.00, respectively. 

A break below these levels would weaken the bullish structure and expose GBP/JPY to a deeper retracement toward the 50-day SMA at 195.03.

Meanwhile, the intraday high of 199.48 remains as resistance, marking the upper boundary of the rising wedge. Above that is the October high of 199.81 and the next psychological level of 200.00.