- Despite trading within a range, GBP/JPY maintains a bullish bias, bolstered by UK inflation figures and expectations of further tightening from the Bank of England.
- GBP/JPY is facing a possible pullback, suggested by the negative divergence between its price action and the RSI, with support at 172.00 and the 20-day EMA at 170.27.
- Further gains can be expected if GBP/JPY breaks above 173.00 with the falling wedge measuring a target of 174.30.
He GBP/JPY is holding on to the 172.00 figure amid a risk aversion push ahead of the US debt ceiling issues and the release of the May minutes of the US Federal Reserve (Fed) . Therefore, investors looking for safety moved towards safe-haven pairs, with the exception of the Japanese Yen (JPY), weakening against the British Pound (GBP). At the time of writing these lines, the GBP/JPY pair is trading around 172.35.
GBP/JPY Price Analysis: Technical Perspective
GBP/JPY continues to trade within a range of the 171.22-172.79 zone after UK inflation numbers cooled, barring an increase in the underlying April Consumer Price Index (CPI). , which was 6.8%, above the previous month and the consensus of 6.2%. This supported the pound sterling as expectations of further tightening by the Bank of England (BoE) increased.
GBP/JPY remains biased to the upside, but since breaking a falling wedge, the pair’s rally towards the measured target at 174.30 has stalled. In an article written on May 23, he says: “After three consecutive sessions, GBP/JPY failed to reach the 173.00 zone which, once broken, could pave the way towards the 174.00 figure, before reaching the measured target. of the falling wedge”. However on Wednesday which is no exception to the rule, as GBP/JPY peaked at 172.79, it fell back more than 50 points, hovering around 172.50.
As GBP/JPY price action made successive higher highs, the RSI indicator printed lower peaks. This means that a negative divergence between the price action and the RSI could open the door for a retracement.
Therefore, the first support for GBP/JPY is 172.00. If it breaks below, the GBP/JPY pair will reach the 20-day EMA at 170.27, with the 170.00 level in play.
On the other hand, if GBP/JPY reaches 173.00, it could pave the way for further gains, while the falling wedge would measure a target of 174.30.
GBP/JPY Price Action – Daily Chart
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
