GBP/JPY recovers to multi-week highs above 163.35 on JPY weakness

• GBP/JPY is posting solid gains of almost 1.80% for the week.
• An upbeat market mood increased appetite for riskier assets.
• GBP/JPY Price Forecast: Test Apr 28 swing high above 164.00.

GBP is rising to fresh multi-week highs on Thursday, up 1.78% and targeting 164.00 amid improving market sentiment. US stocks are recovering from earlier losses, and safe-haven pairs are under downward pressure. At 163.34, the GBP/JPY rises strongly for the seventh day in a row.

GBP/JPY rises on JPY weakness

The pound remains strong during the day, despite the fact that the UK is on holiday to celebrate the Queen’s Jubilee. High inflation in the UK, around 9%, about to print double digits, and slowing economic growth, would keep the GBP vulnerable to further selling pressure. However, it was helped by the yen, affected by the Bank of Japan’s (BoJ’s) ultra-dovish monetary policy stance, despite the fact that the country’s inflation reached 2%.

In the Asian session, BoJ board member Adachi said that trying to strengthen a weaker yen by tightening monetary policy would mean reducing corporate funding. Adachi said that if the Fed’s rate hike cycle cools the US economy, there is a risk that the depreciation of the Japanese yen could be reversed.

Meanwhile, the absence of the UK economic docket had GBP/JPY traders leaning towards a market sentiment game. As for the Japanese calendar, around 12:30 GMT, the Jibun Bank Services and Composite PMIs should shed some light on the Japanese economy.

GBP/JPY Price Forecast: Technical Outlook

Thursday’s GBP/JPY price action shows resistance from GBP bulls, which pushed the British pound for the seventh consecutive session towards fresh daily highs. In fact, the currency cross is trading at four-week highs, so it would be facing strong resistance, which is to blame for the drop from 164.25 to 155.58.

This would indicate that the GBP/JPY is about to top out. However, the Relative Strength Index (RSI) at 58.90 points higher, so a move towards the 28th April high at 164.25 is on the cards.

Therefore, the first resistance of the GBP/JPY would be the daily high of May 5 at 163.57. A break of the latter would expose the May 2 high at 163.89, followed by 164.00 and then the aforementioned 164.25, the April 28 high.

Technical levels