- GBP/JPY rises sharply more than 250 points on Monday due to fundamental reasons.
- The negative divergence on the GBP/JPY one hour chart opens the door for a mean reversion move.
The GBP/JPY rallies to new all-time highs at 170.10 as investors are relieved to see the new UK Chancellor of the Exchequer Jeremy Hunt ditching the Kwarteng mini-budget to try to reassure markets. As a result, the British pound soared against most of the G8 currencies, particularly the yen, gaining 290 points. At the time of writing, the GBP/JPY pair is trading at 169.18.
GBP/JPY Price Forecast
On Monday, GBP/JPY rose, extending gains towards the 170.00 figure, but profit taking in the zone weighed on the pair, pulling back towards the 169.00 figure. It is worth noting that GBP/JPY is trading above the previous 2022 high reached on June 9 at 168.04, so a daily close above it could open the door for a consolidation around 169.00-170.00.
In the short term, GBP/JPY one-hour price action posted a series of higher highs and higher lows, emphasizing the bullish bias. Notably, the Relative Strength Index (RSI) printed a successive series of lower peaks, forming a negative divergence, opening the door to a mean reversal move.
Therefore, the first GBP/JPY support would be the R2 daily pivot at 168.34. The break below will expose the R1 pivot at 167.28, followed by the 50 EMA at 167.17.
GBP/JPY key technical levels
Source: Fx Street
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