The GBP/JPY currency pair continues to draw attention in global forex markets as it trades under notable selling pressure during Thursday’s early European session. The pair has slid towards 193.85, reflecting a mild bearish correction. Despite this short-term decline, technical indicators and broader market sentiment suggest that the bullish bias remains intact, supported by strong trend structure and key moving averages.
In this article, NordaLueur offers a detailed and insightful breakdown of the topic.
GBP/JPY Pressured Below 194.00 Amid JPY Strength
In the early part of the European trading day, GBP/JPY faced downward pressure, slipping to 193.85. This movement coincides with modest strength in the Japanese Yen (JPY) as market expectations mount around another potential rate hike by the Bank of Japan (BoJ).
A tightening stance from the BoJ contrasts with the current monetary policy outlook in the UK, where traders await the release of UK Q1 Gross Domestic Product (GDP) figures. This economic indicator could provide more directional clarity, particularly on whether the Bank of England (BoE) will maintain or adjust its rate trajectory.
Technical Structure Remains Constructive
Despite the slight bearish movement, GBP/JPY maintains a positive technical posture. The pair continues to hold above the 100-day Exponential Moving Average (EMA), a critical trend-following indicator that supports the case for sustained upside. As long as prices stay above this dynamic support, currently located near 192.06, bullish traders are likely to remain in control.
Further affirming the uptrend is the 14-day Relative Strength Index (RSI), which is hovering above the midline at 56.45. This bullish RSI reading implies that momentum is still in favor of the buyers and that any dips may be viewed as opportunities for strategic re-entry into long positions.
Key Resistance Levels to Watch
The GBP/JPY pair must overcome several technical barriers to continue its upward march. The immediate resistance is positioned in the 196.00–196.10 zone, which corresponds to a psychological threshold and also marks the upper boundary of the Bollinger Band. A confirmed break above this area could re-ignite bullish interest and propel the pair toward further upside targets.
- The next significant resistance lies at 196.41, representing the high of May 14.
- If buyers maintain momentum beyond this point, a further rally could lead the pair to test 197.41, the multi-month high from January 6.
These resistance zones represent key validation points for the bullish trend to resume decisively.
Support Levels Offering Near-Term Protection
On the downside, initial support is seen at 193.43, which marks the May 12 low. A sustained drop below this level would indicate deeper short-term selling interest and potentially open the door to lower support areas.
- Below 193.43, the next critical support lies at the 100-day EMA around 192.06.
- A break below this dynamic support would undermine the bullish structure and expose the pair to further losses toward 190.42, the May 7 low.
Nevertheless, as long as the price stays above the 100-day EMA, the market is likely to treat dips as corrections within a broader uptrend.
Market Sentiment and Macro Outlook
Fundamentally, the GBP/JPY cross is reacting to a complex interplay between divergent monetary policies and upcoming economic data. The BoJ’s recent signals about a tighter stance have introduced fresh demand for the Japanese Yen, while uncertainty around UK growth data creates temporary headwinds for the British Pound.
That said, GBP/JPY remains attractive in the carry trade context, with the interest rate differential still favoring the GBP over the JPY. As long as this interest rate spread remains wide, speculative flows could support GBP/JPY on dips, especially in the absence of a sharp shift in BoJ or BoE policy paths.
The upcoming UK GDP print is likely to provide the next catalyst. A better-than-expected number could reinforce the bullish narrative, encouraging fresh buying and a potential test of resistance levels outlined earlier.
Conclusion: Bullish Bias Remains Despite Short-Term Pressure
While GBP/JPY is currently trading under pressure below the 194.00 mark, the broader technical and fundamental landscape continues to support a bullish view. The cross is holding above the 100-day EMA, and momentum indicators like the RSI remain positively aligned. Unless the price closes decisively below 192.06, dips toward current support zones may provide buying opportunities for swing traders.
Highlighted Technical Levels:
- Resistance: 196.00–196.10, 196.41, 197.41
- Support: 193.43, 192.06 (100-day EMA), 190.42
Traders should monitor both price action and UK macroeconomic releases for signs of trend continuation or reversal. Until a breakdown occurs below the 100-day EMA, the bullish bias remains the dominant narrative for GBP/JPY.
