The GBP/JPY currency pair has exhibited a strong bullish reversal from a key demand zone, indicating renewed bullish momentum. This pair continues to follow the broader bullish bias observed in GBP crosses, with the Japanese yen (JPY) weakness primarily driven by the Bank of Japan's (BoJ) dovish policy stance.
Technical Analysis (4H Chart)
Upon examining the 4-hour chart, a clear pattern emerges. The pair has demonstrated a bullish rejection from the 195.30-195.50 demand zone, signifying a potential shift in market sentiment. Currently, the pair is trading at 195.58, rebounding from strong support and setting up for a potential upward leg.
Projection
Given the current technical setup, the projection suggests that as long as the 195.34 level holds, GBP/JPY could push toward 197.31, with potential for 199.72 if GBP strength persists. This outlook is contingent upon the pair maintaining its bullish momentum and breaching key resistance levels.
Fundamental Analysis
The fundamental analysis reveals a bullish bias, driven by several key factors:
1. GBP: Supported by BOE's cautious but tight stance: The Bank of England's (BOE) cautious but tight monetary policy stance, driven by persistent inflation pressures, provides support for the GBP.
2. JPY: Remains fundamentally weak: The JPY remains fundamentally weak due to the BoJ's dovish policy stance and avoidance of major policy tightening. Intervention threats only provide short-term support.
3. Risk Sentiment: Mild risk-on conditions favor GBP: Mild risk-on conditions in the market favor the GBP over the safe-haven JPY, further supporting the bullish bias.
Risks
Two primary risks are identified:
1. BoJ FX intervention: BoJ FX intervention could temporarily strengthen the JPY, potentially disrupting the bullish trend.
2. Dovish BOE shift: A dovish shift in the BOE's policy stance could slow GBP momentum, undermining the bullish outlook.
Technical Analysis (4H Chart)
Upon examining the 4-hour chart, a clear pattern emerges. The pair has demonstrated a bullish rejection from the 195.30-195.50 demand zone, signifying a potential shift in market sentiment. Currently, the pair is trading at 195.58, rebounding from strong support and setting up for a potential upward leg.
Projection
Given the current technical setup, the projection suggests that as long as the 195.34 level holds, GBP/JPY could push toward 197.31, with potential for 199.72 if GBP strength persists. This outlook is contingent upon the pair maintaining its bullish momentum and breaching key resistance levels.
Fundamental Analysis
The fundamental analysis reveals a bullish bias, driven by several key factors:
1. GBP: Supported by BOE's cautious but tight stance: The Bank of England's (BOE) cautious but tight monetary policy stance, driven by persistent inflation pressures, provides support for the GBP.
2. JPY: Remains fundamentally weak: The JPY remains fundamentally weak due to the BoJ's dovish policy stance and avoidance of major policy tightening. Intervention threats only provide short-term support.
3. Risk Sentiment: Mild risk-on conditions favor GBP: Mild risk-on conditions in the market favor the GBP over the safe-haven JPY, further supporting the bullish bias.
Risks
Two primary risks are identified:
1. BoJ FX intervention: BoJ FX intervention could temporarily strengthen the JPY, potentially disrupting the bullish trend.
2. Dovish BOE shift: A dovish shift in the BOE's policy stance could slow GBP momentum, undermining the bullish outlook.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.