- GBP/JPY gained traction for the second day in a row and soared to a one-week high on Monday.
- Risk appetite weighed on safe haven JPY and continued to support the strong move.
- Technical buying above the very important 200-day SMA provided additional momentum to the cross.
The crossing GBP/JPY extended its strong positive intraday move and surged past 154.00, or one-week highs during the middle of the European session.
The cross built on last week’s solid bounce below 151.00, or the year-to-date low, and gained strong follow-up traction for the second day in a row on Monday. This also marked the fourth day of positive movement in the previous five and was sponsored by retreating safe-haven demand, which tends to weigh on the Japanese yen.
Russia and Ukraine gave their most bullish valuations during trading over the weekend, which, in turn, boosted investor sentiment and dampened demand for traditional safe-haven assets. Conversely, expectations of a further rate hike by the Bank of England benefited the British pound and acted as a tailwind for the GBP/JPY cross.
However, optimism remained limited amid further escalation in the conflict between Russia and Ukraine. Indeed, Russia on Sunday attacked a large Ukrainian base near the border with NATO member Poland. In addition to this, a Kremlin spokesman said on Monday that all Russian plans in Ukraine will be fulfilled in full and within the established deadlines.
However, the GBP/JPY cross rallied past the very important 200-day SMA and looks poised to appreciate further. That said, traders might prefer to stay on the sidelines ahead of the UK monthly employment report on Tuesday and the BoE meeting on Thursday. This, in turn, warrants some caution before making aggressive bullish bets.
Technical levels
Source: Fx Street
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