GBPJPY remains in a strong uptrend, underpinned by favorable technical signals and a shifting macroeconomic landscape. While momentum indicators still lean bullish, the presence of negative divergence suggests traders should stay alert to possible near-term pullbacks. With key support and resistance levels clearly defined, upcoming data and central bank guidance from both the UK and Japan will likely shape the next leg of price action. Caution and adaptability remain essential as the market navigates this evolving environment.
High Impact Economic Events
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Since establishing a low of 184.366 on April 9, GBPJPY has advanced by over 7% from trough to peak, driven by a confluence of technical and fundamental tailwinds. A sustained breakout above the recent high at 198.188 would likely reinforce the prevailing bullish trend and pave the way for additional upside.
Currently, the pair is trading above both the 20- and 50-period exponential moving averages, with the slope of both EMAs remaining firmly upward—signaling continued bullish momentum. Key indicators corroborate this technical posture: the Momentum Oscillator remains above the 100 threshold, while the Relative Strength Index (RSI) holds comfortably above the 50 mark, both suggesting persistent buying interest.
However, the emergence of negative divergence warrants a more cautious stance. This pattern points to waning momentum and raises the prospect of a near-term consolidation or corrective pullback before any renewed advance.
Key Resistance Levels
Should the bulls maintain market control, traders may direct their attention toward the four potential resistance levels below:
198.583: The initial resistance level is set at 198.583, which mirrors the 161.8% Fibonacci Extension drawn from 196.834 to 194.004.
200.343: The second resistance level is seen at 200.343, which represents the weekly resistance, R3, calculated using the standard Pivot Points methodology.
201.413: The third price target is identified at 201.413, corresponding to the 261.8% Fibonacci Extension drawn from 196.834 to 194.004.
205.992: An additional price target has been established at 205.992, which reflects the 423.6% Fibonacci Extension drawn from 196.834 to 194.004.
Key Support Levels
Should the sellers take market control, traders may consider the four potential support levels listed below:
196.834: The initial support level is seen at 196.834, corresponding to the high point from June 17.
195.759: The second support level is estimated at 195.759, representing the weekly Pivot Point, PP, estimated using the standard methodology.
194.004: The third support level is identified at 194.004, reflecting the low point marked on June 19.
191.710: An additional downside target is 191.710, mirroring the peak marked on April 25.
Fundamentals
UK business activity picked up slightly in June, with new orders growing for the first time this year—mainly thanks to stronger performance in the services sector. However, manufacturers continue to struggle, and job cuts are increasing. While this suggests the economy is slowly recovering from a rough April, overall growth remains weak.
Global tensions, especially in the Middle East, and concerns about future demand are making businesses cautious. The slower pace of price increases may give the Bank of England more room to cut interest rates, possibly as soon as August.
On the other hand, the Bank of Japan (BOJ) is divided on whether to keep interest rates steady or raise them soon. Some officials are worried that U.S. trade tariffs could hurt Japan’s economy, so they prefer to wait. Others argue that inflation is higher than expected and believe a rate hike may be needed—even if the economy is still uncertain.
At its June meeting, the BOJ held rates steady and said it would slow down the winding back of its stimulus program. The central bank is trying to balance supporting growth without letting inflation rise too much. Its next big decision is expected at the end of July.
Conclusion
GBPJPY continues to draw attention as recent price action reflects a firm bullish bias supported by both technical structure and underlying macro trends. Traders are closely monitoring the pair’s trajectory following a sustained rally off the April lows, while broader economic developments in the UK and Japan remain influential in shaping sentiment.
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