Given the last hot CPI report, the BoE is expected to keep raising rates as it combats with one of the highest inflation rates among the majors. The BoJ keeps standing pat with its loose monetary policy that contributed to one of the strongest JPY depreciations in several years. This policy divergence made the GBPJPY to rally towards new highs and it looks like only recessionary fears can bring the pair down.
GBPJPY Technical Analysis – Daily Timeframe
On the daily chart, GBPJPY is pulling back into the 172.19 support where we can also find the red 21 moving average for extra confluence. That will be an important level for the buyers to hold as a break below it would open the door for a selloff towards the 168.00 handle. The sellers, on the other hand, are looking forward to see the price falling through the 172.00 level as many support levels will be invalidated at that point.
GBPJPY Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see a divergence between the highs and the MACD. This is generally a sign of weakening momentum often followed by pullbacks or reversals. Given that the price is breaking through the trendline, we may expect GBPJPY to fall into the 172.19 support where the buyers are likely to pile in and target new higher highs. The sellers will pile in aggressively if the price dips below the 172.00 handle as that would give them green light for a fall into the 168.00 support.
GBPJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see the key levels to watch:
- For the buyers, a break above the last swing high at 173.67 or a bounce on the 172.00 support area will be the opportunities for long positions.
- For the sellers, a break below the 172.00 support area will be the opportunity to short into the 168.00 handle.
