- GBP/JPY gained strong positive traction on Wednesday and shot to fresh weekly tops.
- The set-up supports prospects for a move to retest multi-month tops, touched on Friday.
- Sustained weakness below 200-hour SMA will negate the near-term positive outlook.
The GBP/JPY cross caught some aggressive bids on Wednesday built on this week’s solid rebound from the vicinity of 100-day SMA support, around the 137.90 region. A sustained move beyond 200-hour SMA was further seen as a key trigger for bulls and pushed the cross to fresh weekly tops.
The GBP/JPY cross has now found acceptance above the key 140.00 psychological mark and seems poised to appreciate further. The momentum seems strong enough and has the potential to lift the cross back towards retesting near three-month tops, around the 140.70 region, touched last Friday.
The latter marks the 61.8% Fibonacci expansion level of the 134.40-140.30 move up and subsequent pullback, which if cleared should pave the way for a further near-term appreciating move. The constructive outlook is further reinforced by bullish technical indicators on the daily chart.
However, the incoming Brexit-related headlines might continue to infuse some volatility around the GBP cross and thus, warrant some caution before placing aggressive bullish bets. That said, any meaningful pullback might still be seen as a buying opportunity near the 139.60-55 horizontal zone.
Some follow-through weakness back below 200-hour SMA, currently around the 139.35 region, will negate prospects for any further positive move, instead prompt some technical selling. The GBP/JPY cross might then accelerate the slide towards the 139.00 mark en-route mid-138.00s.
GBP/JPY 1-hourly chart
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Technical levels to watch
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