The GBP/JPY currency pair has achieved a positive streak for the fifth day in a row, rebounding from an intraday low of 188.70 to reach a nearly three-week high during the early European trading session on Friday. Spot prices surged past the 191.00 level, driven by increased selling of the Japanese Yen (JPY) following Bank of Japan (BoJ) Governor Kazuo Ueda’s cautious comments during the recent monetary policy meeting.
Ueda highlighted ongoing uncertainties in Japan’s economy, with inflation risks lessening somewhat due to recent foreign exchange fluctuations. This sentiment, coupled with a bullish trend in global financial markets, has put downward pressure on the safe-haven JPY. Conversely, the British Pound (GBP) found support after the Bank of England (BoE) opted to maintain interest rates and announced a further reduction of its government bond holdings by £100 billion over the next year, contributing to the GBP/JPY rally.
From a technical standpoint, oscillators on the daily chart are showing positive momentum, indicating potential for further appreciation. However, caution is warranted as the 50-day Simple Moving Average (SMA) has crossed below the 200-day SMA, creating a ‘Death Cross’ pattern on the daily chart. This may present resistance near the 50-day SMA, currently around the 191.75 level, followed by the 192.00 mark. If prices clear this barrier, they could continue to rise, but significant resistance is expected near the 200-day SMA, positioned between 192.35 and 192.40.
On the downside, the 190.40-190.35 range is now expected to provide immediate support, with the psychological 190.00 level and horizontal support at 189.45 following closely. If selling pressure persists, the GBP/JPY could test the 189.00 level, potentially leading to a decline toward the daily swing low around 188.70-188.65. A failure to maintain these support levels may signal the end of this week’s rebound, opening the door for deeper losses, possibly toward the 188.00 round figure and ultimately the 187.35 support zone.
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