GBPJPY Remains in a Solid Uptrend.

GBPJPY remains in a solid uptrend.

Technical Outlook:

GBPJPY remains in a firm uptrend, forming a series of higher highs and higher lows while holding above widening bullish EMAs, signaling strong bullish momentum.
Price is currently consolidating sideways near the recent peak, following a successful retest of the broken descending trendline, a classic bullish continuation setup.
No clear reversal signals have emerged, and the range-bound action suggests accumulation ahead of a potential upward breakout (above 200.00).
A decisive breakout above the psychological resistance at 200.00 would confirm a trend-following breakout, opening upside targets at 206.00 (flagpole projection) and potentially 208.00 (2024 high).
Near-term pullbacks may find support at 196.50 , the prior breakout zone, before resuming the uptrend.

Fundamental Outlook:
The pound is supported by higher-than-expected inflation data for June, with the UK’s Consumer Price Index (CPI) coming in at 3.6%, nearly twice the BoE target. This has led markets to expect that the BoE might delay or pause interest rate cuts at its upcoming meeting in August.
Moreover, the UK Prime Minister’s strong commitment to fiscal discipline has played a pivotal role in reinforcing investor confidence, thereby lending further support to the pound.
In contrast, the BoJ continues to adopt a cautious stance, keeping its policy rate at a relatively low at 0.50%. This conservative approach reflects the central bank’s intent to monitor the economic impacts of US tariff increases before any further action.
The BoJ’s low-rate policy sustains yen carry trades, driving capital outflows into higher-yielding US assets, mostly US treasury bonds, and intensifying downward pressure on the yen.

Analysis by: Krisada Yoonaisil, Financial Markets Strategist at Exness

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