- GBP / JPY moving sideways around 156.00 with a modest bearish bias.
- The negative momentum is waning; a consolidation below 156.00 could lead to further losses.
The GBP/JPY It continues to record lower highs, but failed to touch new lows. You keep getting rejection below 156.00. A consolidation clearly below 156.00 should open the doors for further losses, targeting first 155.65 and then 155.35. The next support is at 154.95.
On the upside, a firm recovery above 156.50 would put the price above the 21 SMA, improving the outlook for the pound. The next level to watch is the 157.00 zone followed by a downtrend line at 157.20. A break to the upside would negate the bearish bias, further strengthening the positive outlook.
Technical indicators are sloping lower but not showing much strength. During the week, key economic reports in the US are due, as well as decisions by the Federal Reserve and the Bank of England, so volatility could increase dramatically.
In a broader perspective, the correction in GBP / JPY from multi-year highs reached the 155.50 / 70 support area. A drop below should point to more losses. Whereas if it stays above, it could resume the bullish move.
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