GBP/JPY Price Analysis: The pound approaches trendline resistance at 140.00

GBP/JPY's rally extends to levels near 140.00 resistance area.

Brexit hopes and COVID-19 vaccines have boosted pound's demand.

The sterling appreciated for the third consecutive day on Tuesday, buoyed by the positive market mood, to hit session highs at 139.85 before pulling back to the mid-range of 139.00.

The progress on the developments of diverse COVID-19 vaccines has spurred hopes of a cure that might alleviate the devastating economic impact of the pandemic, fuelling investor’s appetite for risk. Beyond that, the widespread confidence about a Brexit deal, even a basic one, has contributed to underpinning demand for the cable.

GBP/JPY approaching important resistance at 140.00

The pair has turned down from 139.85 high on Tuesday, just 15 pips shy of the downward trendline resistance from early September highs. Technical indicators are pointing upwards on daily charts, with the RSI approaching overbought levels, which might anticipate a downward correction before further appreciation.

On the upside, above the mentioned 140.00 trendline resistance, the next area of interest might be 140.35 (November 11 high) and 141.45 (September 4 high). On the downside, immediate support lies at 139.00 (intra-day level) and below here, 137.20 (November 19 low) and the 50-day SMA, now at 136.65.

GBP/JPY daily chart

Technical levels to watch