An upward shift has recently propelled GBP/JPY beyond a significant resistance area, suggesting the potential for a long-term change in trend.
Could the pair be on the cusp of a positive breakout?
Let’s delve into the 4-hour chart to see what’s happening:
On Wednesday, market activity was influenced by hints from U.S. officials about possible exemptions to Trump’s tariff plans, alongside traders brushing off a higher-than-expected CPI report for January. This resulted in increased risk-taking, with European currencies, notably the British pound, benefiting from the optimistic view of a peace deal between Russia and Ukraine.
Conversely, the Japanese yen saw a decline after the Bank of Japan’s Governor made no indication of adopting a more aggressive monetary stance in his recent address.
It’s crucial to acknowledge that market price directions and volatility are generally guided by fundamental factors. If you’re not yet up to speed on the dynamics affecting the British pound and the Japanese yen, it’s an opportune moment to review the economic calendar and stay current with daily fundamental news updates.
This week, GBP/JPY has consistently gained ground, moving past the important psychological mark of 192.00.
Notably, it’s trading above the 191.59 R1 Pivot Point, the 100 SMA on the 4-hour chart, and the trend line that has been a ceiling for bulls since the beginning of the year.
So, is GBP/JPY primed for a bullish turnaround?
Look out for more bullish candlestick patterns and sustained movements above 192.00. Such actions could attract additional buyers, potentially nudging GBP/JPY towards 194.00 or even 195.00.
However, if the pair begins to show signs of consolidation at these levels, a return to the larger downtrend seen in 2025 remains a possibility.
In that scenario, be alert for bearish candlestick formations and continuous pressure below 192.00, which might lead to a pullback to 190.00 or even 189.00.
Regardless of the direction you choose to trade, remember to implement sound risk management strategies and stay informed on key catalysts that could shape market sentiment!
