The GBP/JPY cross builds on the previous day's goodish rebound from the 160.00 psychological mark, or a one-month low and gains some follow-through traction on Tuesday. The momentum remains uninterrupted through the mid-European session and lifts spot prices back closer to a technically significant 200-day Simple Moving Average (SMA), around the 163.40 region in the last hour.

That said, a strong pickup in demand for the US Dollar is seen weighing on the Sterling Pound and might keep a lid on any further gains for the GBP/JPY cross, at least for the time being. The aforementioned fundamental backdrop, however, favours bullish traders and suggests that the path of least resistance for spot prices is to the upside. Hence, any meaningful dip might continue to attract fresh buyers and is more likely to remain limited.

It is worth noting that the impact of the Silicon Valley Bank (SVB) collapse is not restricted to the United States. In a joint statement from the UK Treasury and the Bank of England (BOE), the UK Finance Minister, Jeremy Hunt, said on Monday that the “deposits will be protected, with no taxpayer support.” The UK authorities confirmed that HSBC bank agreed to rescue the Silicon Valley Bank’s (SVB) UK arm. UK Hunt further added, "No other UK banks are directly materially affected by these actions."

The crossover of EMA100-50-20 on the four hourly time frame suggests that GBP/JPY will be targeting the near by prices for correction and short term recovery before continuing its hawkish stance. The RSI has maintained itself well above 50 - supporting the hawkish momentum on awesome oscillator. 

GBPJPY opting for a minor recovery before hawkish continuation

Mar 14 2023