The Japanese Yen strengthened against both the British Pound and the US Dollar on Friday following Iran's announcement that the Strait of Hormuz is now 'completely open' for all commercial vessels during the ceasefire, in line with the truce in Lebanon [1][2]. This development eased concerns about disruptions to global energy flows, which had previously supported both Oil prices and the US Dollar amid heightened geopolitical risk [1][2]. As a result, GBP/JPY slipped to around 215.05 from an intraday high of 215.69, while USD/JPY fell toward 158.20, down 0.61% on the day after reaching a daily high of 159.53 [1][2].
Oil prices reacted sharply to the news, with West Texas Intermediate (WTI) dropping to its lowest level since March 11, trading around $81.50 and down nearly 9% on the day [1]. The reduction in the geopolitical risk premium weighed on the Japanese Yen earlier in the week, but as Oil prices retreated, the Yen regained traction and became the strongest major currency against the US Dollar on the day [1].
Diplomatic developments between the US and Iran are also being closely monitored, with US President Donald Trump stating that the US is close to reaching a deal with Iran, which has reinforced hopes for a more durable de-escalation in the region [2]. On the monetary policy front, Bank of Japan Governor Kazuo Ueda warned of potential stagflation risks for Japan, citing inflation driven by energy-related supply shocks and weaker economic growth [2]. Société Générale analysts noted that expectations for further monetary tightening in Japan have been scaled back, with the next rate hike now seen around June or July [2].
Technical analysis for GBP/JPY indicates the pair remains in a bullish structure, holding above the 20-day Simple Moving Average at 212.92, with the upper Bollinger band at 216.39 acting as resistance. Momentum indicators such as the 14-day Relative Strength Index at 63.83 and a positive MACD histogram suggest buyers still retain control, though the pair is not yet in overbought territory [1].
Currency heat maps from both sources show the Japanese Yen outperforming major peers, particularly the US Dollar, which was the strongest only against the Canadian Dollar [1][2].
CONCLUSION
The reopening of the Strait of Hormuz and easing geopolitical tensions have strengthened the Japanese Yen while pressuring Oil prices and the US Dollar. Market participants are watching ongoing US-Iran diplomatic efforts and Bank of Japan policy signals for further direction. The immediate market reaction has been a notable shift toward the Yen and away from risk-sensitive assets.