GBP/JPY’s post-dovish BoE policy announcement weakness last Thursday is now well in the rearview mirror, with the pair confidently pushing to the north of the 157.00 level and eyeing a test of annual highs around 158.00. Unfortunately at the time of writing the price has already reached 160.0. 

The yen is sensitive to rising rates internationally as the Bank of Japan keeps yields fixed around zero all the way up to 10 years out with its Yields Curve Control policy. The fact that UK yields were up more than 10bps all the way across the curve has thus contributed to a significant widening of UK/Japan rate differentials, thus encouraging yen to sterling flows. After breaking above all of its major moving averages in the last few weeks, GBP/JPY still looks very much odds on to test annual highs around 162.0

The cross-currency pair rallied past a downward sloping resistance line from October 2021 the previous day, now support around 157.30.

The trend line breakout takes clues from the bullish MACD signals and the 10-DMA’s piercing off the 21-DMA, known as a bull cross, to suggest the quote’s further upside.

That said, February’s high near 158.10 gains the immediate attention of the GBP/JPY bulls ahead of the October 2021 peak of 158.22.

In a case where the pair rallies past 158.22, June 2016 high near 160.15 will gain the market’s attention.

Alternatively, pullback moves remain less worrisome until staying beyond the resistance-turned-support line near 157.30.

Following that, the 10-DMA and the 21-DMA levels, surrounding 155.00 and 154.35 respectively, will act as the last defenses for the GBP/JPY bulls.

GBPJPY Trading Near Annual Highs

Mar 22 2022

Stop Loss -1.23%

Holding time 6hr

162.000

Entry price

164.000

Stop loss price