- The GBP/JPY pair trims last week’s losses but remains below a double top neckline as downside risks remain.
- Risk appetite in the market dented the appetite for the JPY as a safe haven.
- GBP/JPY Technical Outlook: Retest of a double top on the daily chart opens the door for renewed selling pressure.
The British Pound regained some ground against the Japanese Yen on the back of a modest improvement in market sentiment, but the rally stalled at the neckline of a double top chart pattern, with a target of 148.00. At the time of writing this article, the pair GBP/JPY trades at 152.67 during the North American session.
US equities reflect improving market sentiment, rallying 2%-3.58% as Ukraine shows it is ready to resume talks with Russia. On Tuesday, in an interview with ABC, Ukrainian President Volodymyr Zelensky commented that he is ready for dialogue and reiterated that Ukraine has lost its interest in joining NATO.
GBP/JPY rallied overnight once the Asian session started, with the news that Ukraine was no longer interested in joining NATO, jumping 50 pips near 152.00 ahead of the European session. Once European traders got to their desks, the GBP/JPY pair posted its second push and posted a daily high of 152.72.
GBP/JPY Price Forecast: Technical Outlook
GBP/JPY is skewed to the downside, and Wednesday’s rally offered JPY bulls a better entry price, in case they hadn’t missed the March 4th 250 pip drop from 154.25. The neckline of GBP/JPY is found at 152.94 and would be a problematic resistance level for GBP bulls to overcome due to increased selling pressure linked to the double top.
That said, the first support for the GBP/JPY would be the daily low of March 8 at 150.97. A breach of the latter would expose crucial support levels from last year, led by the Dec 20 low at 149.60, followed by the Dec 3 low at 148.97 and the double top target at 148.00.
Technical levels
Source: Fx Street
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