The GBP/JPY pair has risen above 199.00, showing a 0.35% increase as the Yen declines. This change follows the US President’s announcement of 25% tariffs on Japanese imports, which has weakened the Yen’s position as a safe-haven currency. This news boosts the pair’s stable performance, keeping it close to year-to-date highs. With the Yen under pressure, the GBP remains strong and aims for weekly gains. The pair is trading around 199.10 after hitting a daily peak of 199.45, supported by its 20-day Simple Moving Average. The technical outlook is positive, with ongoing buying interest sustaining the upward trend.

Technical Analysis

The pair consistently records higher highs and lows within a rising channel. It stays above 197.50, with the 20-day Moving Average offering short-term support. Immediate resistance is at 199.45, followed by 199.97 and the 200.00 mark. Further gains are possible as the RSI hovers around 60.70. Momentum indicators suggest potential for more upside, with the MACD reflecting a positive trend. However, it’s essential to watch the 200.00 level, as geopolitical events can influence market direction. If key resistance zones aren’t broken, it may signal a slowdown. With the GBP/JPY pair climbing above 199.00 and approaching 200.00, there’s a notable shift favoring Sterling over the Japanese Yen. This shift is not just due to technical strength but also reflects reactions to recent trade tensions, especially after the White House’s decision on new tariffs. As a result, confidence in the Yen—a typical low-risk asset in times of global uncertainty—has noticeably declined. It’s important to keep an eye on this shift, as it doesn’t happen in isolation. While Sterling is benefiting from lower demand for the Yen, it isn’t solely relying on domestic factors. External shocks are skewing market behavior, which may not provide reliable long-term support but can drive short-term movements.

Trading Strategy

From a technical perspective, the pair is well-supported above its 20-day moving average, which helps drive ongoing buying interest. Each time it dips toward 197.50, buying returns. This indicates a classic buyer-led scenario, where traders use pullbacks as entry points rather than chasing prices higher. Such setups are generally reliable for short-term movements but can unravel quickly with increased headline risks. Resistance at 199.45 currently holds firm but seems attainable. If broken, a move towards 199.97 and above the 200.00 mark becomes more likely, especially with the RSI still around the mid-60s and not yet in overbought territory. Since momentum has not peaked, there’s room for further gains, though approaching a round number like 200.00 should be handled cautiously, as these often act as psychological barriers. However, we cannot analyze price action in isolation. Trade policies and global dynamics continue to affect not just valuations but also market trend assumptions. If other countries respond or interest rate expectations change in the next two weeks, market paths could shift quickly. Traders holding positions need to adjust based on chart levels and incoming news affecting overall market sentiment. By monitoring the MACD histogram, we see that bullish momentum is building, but signs of early divergence may emerge based on how the next daily close forms. If the pair stagnates near 200.00 without new catalysts, the case for a pullback strengthens. However, it doesn’t make sense to preemptively act. A responsive, rather than predictive, approach appears to be the more favorable strategy now. Effective spread management and patience will be crucial, especially before any news that could sway global risk appetite. There is potential for upward movement, but buyers will require more than mere momentum; they need strong fundamental backing to support any breakout beyond current highs. Create your live VT Markets account and start trading now.

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