FX.co ★ GBP/JPY

The GBP/JPY currency pair experienced an ascent to a fresh intraday high of around 198.40 during early European trading on Friday. This upward movement signifies a retreat for the Japanese Yen against the British Pound, largely driven by an overall improvement in global risk sentiment. When investors feel more optimistic about the global economic outlook and geopolitical stability, they tend to reduce their exposure to traditional safe-haven assets like the Japanese Yen, opting instead for higher-yielding or growth-sensitive currencies such as the British Pound. Technically, the GBP/JPY pair continues to exhibit a robust uptrend. The pair finds strong foundational support above the critical 100-day exponential moving average (EMA) on the daily chart, a key indicator for confirming a sustained bullish bias. Further reinforcing this upward momentum is the Relative Strength Index (RSI), which is positioned around the mid-line at 65.00. While not yet in deeply overbought territory, this reading indicates healthy near-term upward momentum and suggests that buyers remain in control. On the upside, the GBP/JPY pair faces its immediate resistance level at 198.85, which corresponds to the upper band of the Bollinger Bands. A decisive and sustained break above this level would serve as a strong confirmation of increased bullish momentum, potentially setting the stage for a push towards the significant psychological level of 200.00. Beyond this, the next substantial resistance is anticipated at 200.75, a high last recorded on May 28, 2024, representing a multi-month peak.

However, the current proximity of the RSI to overbought territory on the daily chart warrants caution for traders considering new bullish bets. While the overall trend is positive, an overbought RSI can sometimes precede a short-term correction or consolidation period. Therefore, it might be prudent for traders to wait for an extension of the ongoing multi-day consolidation before positioning for further upside movements. Despite the potential for a near-term pullback, the broader market sentiment appears to favor continued appreciation for the GBP/JPY. This suggests that any corrective decline would likely encounter strong buying interest and find support near the weekly trend line, specifically in the 168.70-168.65 area. This zone is expected to act as a crucial psychological and technical floor. Conversely, a decisive break below this support area could trigger significant technical selling, paving the way for a sharper decline. Such a move could accelerate towards the 168.00 level, followed by the 167.60-167.55 area, and potentially extending to the lower boundary of the weekly range, around 167.00-166.90. The latter range is a critical pivot point; a decisive break below it would invalidate the current positive outlook and signal a shift in the short-term trend in favor of bearish traders.