GBP/JPY struggles to extend the profits after the annual maximum, it remains above 197.00

• GBP/JPY is consolidated around 197.70 after confirming an upward triangle break last week.
• The GDP of the United Kingdom in the Q1 grew 0.7% intertrmetral, but the drop in available income and the increase in current account deficit weigh on the feeling.
• The industrial production of Japan increased only 0.5% intermennsual in May, breaking expectations and highlighting the weak manufacturing impulse.

The sterling pound (GBP) weakens in front of the Japanese Yen (JPY) on Monday, falling below the 198.00 zone in the middle of a slight corrective setback since the maximum of the year of 198.81 marked on Friday. The pound is losing ground compared to main peers to start the week.

The GBP/JPY crossing remains plane during the American session, around 197.70 at the time of writing, recovering from an intra -estate of 197.21 touched earlier in the day. The crossing is consolidating after the strong rally last week while investors reassess the macroeconomic panorama of the United Kingdom and the feeling of global risk.

In the data front, the economy of the United Kingdom expanded 0.7% in Q1 – the strongest in a year – while annual growth remained at 1.3%. However, the actual income of households fell 1.0%, the greatest fall since early 2023, and the savings rate decreased to 10.9%, reflecting pressure on consumer finances. Adding to the weak tone, the current account deficit was extended to 23.46 billion pounds, well above expectations.

In Japan, industrial production increased an intermencing 0.5% in May, bouncing a contraction of 1.1% in April, but being well below the expected increase of 3.4%, according to preliminary estimates. In annual terms, production decreased 1.8%, marking the first annual fall in five months and reversing a gain of 0.5% seen in April – a sign that Japan’s manufacturing recovery remains fragile.

From a technical perspective, the GBP/JPY has confirmed a break above an ascending triangle pattern, with the upper limit around 196.00 – 196.50. While the pair is consolidated after reaching a maximum of the year of 198.81 on Friday, the structure remains bullish whenever it is maintained above the ascending trend line and the exponential mobile (EMA) average of 21 days in 196.31. The relative force index (RSI) has backed up 60, suggesting a pause in the impulse, while the MACD remains in the upward territory, although the impulse is softening.

A sustained movement above 199.00 could trigger a break towards the psychological level of 200.00, while a break below 196.30 would invalidate the upward configuration and expose downward risks around 194.00.