GBP / JPY struggles with 156.50 amid risk appetite, ahead of BoJ meeting

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  • The British pound rebounded from Wednesday’s losses, but the bullish move was limited due to lack of tracking.
  • Market sentiment is bullish, boosting risk-sensitive currencies except for the British pound.
  • GBP / JPY: Sloped higher from a technical perspective, but the price action reflects the exhaustion in the recent bullish move.

The pair GBP/JPY it rises during the American session, trading at 156.55, up 0.07% at the time of writing. Positive market sentiment surrounds financial markets, with US equity indices rising between 0.37% and almost 1%. Furthermore, bond yields are rising during the day as more central banks realize that the “transitory” thesis appears to wane.

On the aforementioned issue, the president of the European Central Bank (ECB), Christine Lagarde, said that higher inflation could last longer than expected. However, the bank estimates that prices will begin to moderate in 2022.

On Thursday, at the beginning of the Asian session, the Bank of Japan (BoJ) made its monetary policy decision. The BoJ kept interest rates at -0.10% as expected while maintaining the Yield Curve Control (YCC) on an 8-1 vote, with member Kataoka disagreeing on the issue.

There was no follow-up to the BoJ announcement as most Japanese yen pairs remained at familiar levels.

On Friday, the Japanese economic calendar will present the figures from the Tokyo Consumer Price Index. Also, the employment figures with the jobs / applicants ratio and the unemployment rate will offer some insights to GBP / JPY traders about the Japanese economy.

GBP / JPY Price Forecast: Technical Outlook
Weekly chart

The weekly chart shows that the GBP / JPY is in a solid uptrend represented by the ascending sloping weekly simple moving averages (WSMA) located below the spot price, together with a test of the resistance level of February 2, 2018 at 156.61. Since July, the cross currency has appreciated 6.50%, and the 100 SMA is crossing over the 200 DMA, adding another bullish signal to the aforementioned tracks.

Furthermore, an upward sloping trend line traveling from the March 2020 lows to below the September 2020 lows was unsuccessfully tested by the GBP / JPY pair, which bounced off 150.00, rebounding over 700 pips until finally settle at current levels.

Therefore, the pair could head higher. However, the lack of a recent price action above the 156.00 threshold leaves June 24, 2016, with swing highs around 159.20 as the next resistance level.

TECHNICAL LEVELS

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