- GBP/JPY is under pressure on Yen demand, is creating a double top pattern, the hourly chart shows.
- The hawkish shift in BOE expectations will likely keep on the hunt for a major trendline resistance.
The GBP/JPY pair fell 40 pips to a session low of 147.60 as the USD/JPY pair failed to hold above the 200-day moving average and fell below 110.00.
As of writing, the GBP/JPY pair is trading at 147.75. Meanwhile, the USD/JPY pair is trading at 100.04, having clocked a session low of 109.91.
The bid tone around the Yen will likely strengthen further if the equities turn risk-off. In this case, GBP/JPY may drop below 147.50 (double top neckline, as per the hourly chart), opening doors for 147.00.
That said, the probability of a deeper sell-off appears low if we take into consideration the hawkish shift in BOE expectations. For instance, the odds of a 25 basis point rate hike in August have improved to 50 percent after the better-than-expected UK services PMI release.
GBP/JPY Technical Levels
Support: 147.50 (double top neckline), 146.95 (5-day moving average), 146.59 (50-hour moving average).
Resistance: 148.00 (session high), 148.20 (falling trendline – April 18 high-April 26 high), 148.52 (50% Fib R of April 13 high – May 29 low).
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