- GBP/JPY continued to trade with a positive bias on Tuesday, although it was unable to sustain above 155.00.
- GBP/JPY continues to move higher within a short-term uptrend channel.
- If risk appetite can improve in February, yen weakness could push the pair towards recent highs near 158.00.
The GBP/JPY continues to trade with a bullish bias on Tuesday against a backdrop of favorable risk appetite, although the pair has been unable to hold above the 155.00 level and has dipped below it again in recent trading. A strong start to the year for house price growth according to data from UK lender Nationwide, coupled with confirmation that the manufacturing PMI had risen to its highest level in six months in January helped keep sterling supported. Meanwhile, market commentators also cited investor speculation that the BoE could announce its QE plans alongside a 25bps rate hike on Thursday as support for the pound.
Ahead of Thursday’s key monetary policy announcement, GBP/JPY continues to move higher within a short-term uptrend channel that has been guiding price action for almost the last week. If the pair can break above the 155.00 level, it faces solid resistance at the 155.45 area, and the area it failed to break through at the end of last week. A break above this area (perhaps as a result of the BoE’s tighter bets) would open the door for a move above 156.00 and towards resistance in the 157.00 area. Meanwhile, if February turns out to be a better month for risk appetite than the previous one, yen weakness as investor demand for more risk-sensitive assets increases could push the pair towards January highs and the fourth quarter of 2021 in the area of ​​158.00.
Source: Fx Street
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