- GBP / JPY picked up pace and maintains it on Tuesday.
- Acceptance above the 61.8% Fib retracement supports the prospects for a further appreciation move.
The GBP / JPY attracted some buying after falling near the 138.15 region on Tuesday and boosting yesterday’s gains to more than 300 pips. Strong follow-up momentum for the second straight session pushed the cross to two-month highs.
Optimism about the COVID-19 vaccine and hopes for a last-minute Brexit deal forced investors to delay the Bank of England’s negative interest rate expectations until June 2021. This, in turn, was seen as a factor key that triggered a hedge of the shorts in the pound.
With the last leg up, the GBP / JPY cross has now moved above the 61.8% Fibonacci level of the 142.72-133.05 drop.. Given the advance to a nearly month-old downtrend line resistance, the setup favors bullish traders and supports prospects for a further appreciation move.
That said, technical indicators on intraday charts already show intermittent overbought conditions and warrant some caution. Therefore, it will be wise to wait for consolidation in the short term, or a modest pullback to 139.00 before making any new bullish bets.
However, the GBP / JPY cross now appears poised to break above the key psychological 140.00 mark and aim to test the next big hurdle near the 140.65-70 region. Some subsequent purchases have the potential to push the price towards 141.00, en route to the supply zone of 141.30 / 35.
Credits: Forex Street
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