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GBP/JPY jumps to 2-week highs, bulls have the upper hand above 163.50

  • GBP/JPY gained strong positive traction on Monday and was up around 200 pips from the daily low.
  • The BoJ cut its assessment for most regional economies, which weighed on the JPY and extended support.
  • Dovish USD price action benefited the British pound and continued to support the strong momentum.

The crossing GBP/JPY added to its strong intraday gains and surged to a two-week high, above 163.50 during the first half of the European session.

Following the modest opening of the bearish gap, the GBP/JPY cross caught aggressive bids on the first day of a new week and is now up around 100 pips from the daily low near the 161.60 region. The Japanese yen weakened across the board after the Bank of Japan lowered its assessment for most regional economies. In addition to this, the Governor of the BoJ, Haruhiko Kuroda, warned about the great uncertainty about the consequences of the Ukraine crisis.

On the other hand, the British pound got some support from the subdued price action of the US dollar, weighed down by a nice pick-up in demand for the common currency. The combination of supportive factors helped offset disappointing UK macro data, which shows economic growth slowed to 0.1% in February from 0.8% previously. In addition, UK industrial and manufacturing production unexpectedly contracted during the reported month.

The strong intraday rally brought with it some short-term trading stops located near the 162.35-162.40 zone, a resistance marked by the upper end of a three-day consolidation range. Therefore, the momentum could be further attributed to some technical buying. A subsequent move beyond the 163.00 mark could already have set the stage for further gains amid caution around BoJ intervention to defend its 0.25% yield target.

Technical levels

Source: Fx Street

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