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  • GBP/JPY briefly topped the 145.00 level for the first time since December 2019 on Wednesday.
  • The pair looks set for a ninth week of successive gains, as GBP continues to benefit from vaccine optimism.

It was business as usual for GBP/JPY on Wednesday; the pair continued to grind to fresh post-start of pandemic highs and briefly topped the 145.00 level for the first time since December 2019. As things stand, with GBP/JPY currently up 0.2% on the week, the pair is on course for a ninth consecutive week of gains. On the day, the pair is up 0.3%.

Most of the pair’s upside came around the time of the open of European cash equity trade, when GBP/JPY rallied from the 144.50s to above 145.00 in an about two hours. Since then, the pair has been consolidating in the 144.90s as the bulls mull what technical landmark to target next. A downtrend linking the September and November 2018, March and December 2020 highs is likely to come into play around the 146.00 mark. A break above that would open the door to further upside towards the 148.00 level (the December 2019 high).

GBP/JPY fundamentals

GBP has been an outperformer in the past few months after the UK avoided a no-deal Brexit outcome and has subsequently been the fastest country to rollout vaccines, setting the stage for a comparatively early economic reopening later in the year. Meanwhile, amid intense rallies in stocks, commodities, and other risk assets in anticipation of more US fiscal stimulus, continued central bank support and rapid global vaccine rollouts that are expected to get the pandemic under control, safe-haven assets such as JPY have been out of favour.

The combination of a stronger GBP and weaker JPY has, of course, been good for GBP/JPY. As noted, the pair looks set for a ninth consecutive week of gains. Since the start of October 2020 (19 weeks ago), the pair has only seen 4 weeks in the red and, over that time period, has rallied roughly 7.5%.