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GBP/JPY tracks sustained break above 154.75 amid impending bearish crossover

GBP/JPY tracks sustained break above 154.75 amid impending bearish crossover

GBP/JPY builds on three-day bullish momentum as bulls eye maintains movement above recent highs near 154.75. The ongoing recovery over the past decade can be attributed to the Fed’s hawkish outlook on interest rates and a shrinking balance sheet, which sent USD/JPY up sharply along with the US dollar and profit margins i.e. US dollars.

Additionally, a major breakout in the US fourth quarter annual GDP data also fueled the US Dollar’s upside momentum, helping the upside seen in USD/JPY, as well as GBP/JPY. Meanwhile, the sense of calm before the Russia-Ukraine crisis, as the US sought to defuse diplomatic tensions, weighed on the appeal of the Japanese yen, which in turn contributed to a rise in the GBP/USD exchange rate JPY. On the other hand, the impending Brexit and political instability in the UK continue to keep the GBP bears alive and happy. The Irish Democratic Unionist Party`s (DUP) First Minister Paul Givan said that the UK must take action if the European Union (EU) agreement cannot be reached by February 21.

Meanwhile, members of the UK PM Boris Johnson`s Conservatives party are considering their options, as pressure mounts on Johnson over his involvement in the violation of government rules during the covid lockdown in the country. Looking ahead, markets will remain focused on the geopolitical developments and UK political news ahead of the US PCE inflation release. From a short term technical perspective, GBP/JPY is trying hard to extend the upside towards 155.00 but bulls remain cautious amid a looming bear cross on the daily sticks.

The 50Daily Moving Average (DMA) is on the verge of cutting the 100DMA for the downside, which will flash a bearish signal. Immediate resistance is seen at 154.75, above which the 155.00 round will be tested. On the downside, the daily low of 154.26 will come into play before the bears target yesterday’s low of 153.82. The 14-day Relative Strength Index (RSI) is slightly higher but still below its moving averages, suggesting bullish attempts may face stiff resistance.