GBP/JPY stabilizes at highs around 182.50

• GBP/JPY posts some gains in the 182.55 zone.
• The ECB Banking Forum in Sintra on Wednesday, the highlight of the week.
• A Reuters poll reveals that the BOJ will intervene if USD/JPY reaches 145.00.

At the beginning of the week, the pound lost ground against most of its rivals, including the dollar, the euro and the Swiss franc. A cautious mood in markets and investors consolidating gains that sent the pair to its highest since 2015 make it difficult for sterling to find demand. Furthermore, political tensions in the UK public sector encourage investors to stay away from the pound.

UK government to ignore public sector pay rises

The UK government is said to be considering ignoring certain recommendations from pay review bodies regarding increases in public sector wages. It is reported that this decision is motivated by concerns about the possible negative impact on the economy, specifically on inflation. In that sense, the uncertainty about the possibilities of union strikes in the midst of this decision made the pound lose interest.

That said, investors will be looking for additional clues on the Bank of England’s (BoE) next steps on monetary policy on Wednesday at the European Central Bank Forum in Sintra, Portugal.

Last Thursday, the BoE surprised with a 50 basis point rate hike, while markets were expecting 25 basis points, hinting in its statement that there will be further rate hikes this year. The surprise rise, as well as Governor Bailey’s comment on Wednesday, may continue to influence sterling price action.

Most economists polled by Reuters predict that the Bank of Japan will step in to stem the yen’s slide if the USD/JPY pair reaches 145.00. Meanwhile, the Yen is weakening on weak inflation numbers and the Bank of Japan’s dovish stance.

GBP/JPY Levels to Watch

Technically speaking, the GBP/JPY pair maintains a bullish outlook for the short term, according to the indicators on the daily chart. Both the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) are showing strength, sitting in positive territory, with the cross trading above its main moving averages, suggesting that buyers are in command. . However, both indicators point to overbought conditions, so we should not rule out further falls.

If the GBP/JPY pair manages to rally, the next resistances to watch are at the 183.00 zone, followed by the 183.50 zone and the 184.00 zone. On the other hand, the 181.20 level remains the key support for the cross. If it breaks, the 180.00 zone and the 179.00 level could come into play.

GBP/JPY Daily Chart