GBP/JPY Clings to 196.16 Amid Risk-On Sentiment

GBP/JPY Clings to 196.16 Amid Risk-On Sentiment

Key Points

  • GBP/JPY remains strong, trading at 196.16, marking a sixth consecutive day of gains.
  • Successfully surpassed the Kijun-Sen at 195.26, indicating a potential for further rises.
  • Key supports at 196.00 and lower levels down to 193.81 are critical buffers against declines.

The British Pound to Japanese Yen exchange rate (GBP/JPY) has shown notable strength, ascending for the sixth consecutive day, a move characterised by a broader market sentiment inclined towards risk. Currently, the pair trades at a robust 196.16, remaining virtually unchanged during the session but holding gains impressively. This recent trend suggests a buoyant market posture as investors navigate a climate marked by a ‘risk-on’ impulse, largely influenced by anticipation surrounding global economic cues.

Yen’s Decline Amid Risk-On Trading Pre-US Data

As GBP/JPY enjoys an uptrend, safe-haven currencies like the Japanese Yen have lagged. This underperformance is attributed to investors positioning themselves ahead of pivotal economic events, such as the imminent release of U.S. inflation data. A typical shift occurs where riskier assets gain appeal under the expectation of favourable economic reports, diminishing the allure of safe havens, which are traditionally preferred during times of uncertainty and economic pessimism.

GBP/JPY Surpasses 195.26, Eyes Resistance at 197.00

From a technical perspective, GBP/JPY’s resilience is underpinned by a series of strategic resistance and support levels that dictate short-term price action. The recent breach of the Kijun-Sen at 195.26 fortified the ascent towards the 196.00 mark and signalled the potential for further gains. Above this, the psychological threshold at 197.00 looms as a formidable barrier. Surpassing this could expose the pair to the next significant resistance at 197.92. This was the peak on April 26. If overcome, it paves the way towards the year-to-date high at 200.59.

GBP/JPY Key Support Levels Near Current 196.00 Price

Support levels are equally crucial to monitor, with 196.00 as a pivotal point aligning with current trading prices. A drop below this level could see the GBP/JPY pair seek solace at the Kijun-Sen once again, now turned support at 195.26. Further weaknesses could drive the pair towards the Senkou Span A at 194.54. Subsequently, they might reach the Senkou Span B at 194.24. The Tenkan-Sen at 193.81 will also be a significant buffer against a deeper retreat.

Bullish Signs for GBP/JPY with Strong RSI Readings

The technical indicators reinforce a bullish outlook for GBP/JPY, with the Relative Strength Index (RSI) indicating momentum favouring continued bullishness. This setup suggests that barring any significant geopolitical or economic shocks, the pair may maintain its upward trajectory. Investors and traders closely monitor levels and indicators to manage near-term volatility and opportunities in the GBP/JPY market.