GBP/JPY rallies to its highest level since August 2005 as traders look to BoJ on Friday

GBP/JPY attracts strong follow-through buying for the third successive day on Thursday.
The lack of decisive action and the BoJ’s uncertain rate outlook weigh heavily on the JPY.
A modest USD downtick benefits the GBP and also contributes to the positive momentum.

Haresh Menghani FXStreet

The GBP/JPY cross gains strong positive traction for the third straight day on Thursday and spikes to the 195.00 neighborhood, or its highest level since August 2015 during the first half of the European session.

Despite the recent verbal warnings by Japanese authorities, the lack of any decisive action and the Bank of Japan's (BoJ) cautious approach towards further policy tightening continues to weigh heavily on the Japanese Yen (JPY). This, along with a goodish pickup in demand for the British Pound (GBP), bolstered by a modest US Dollar (USD) weakness, turn out to be key factors that provide a strong boost to the GBP/JPY cross.

The upward trajectory could further be attributed to technical buying following the overnight breakout through the 192.80-192.85 supply zone and a subsequent strength beyond the previous YTD peak, around the 193.50-193.55 region. Hence, it remains to be seen if the bullish run is backed by genuine buying or turns out to be a stop run as the market focus now shifts to the crucial BoJ decision, scheduled to be announced on Friday.

In the meantime, a mildly softer tone around the equity markets could offer some support to the safe-haven JPY. Apart from this, bets that the Bank of England (BoE) could start cutting interest rates, as early as June, might act as a headwind for the GBP. Heading into the key central bank event risk, the fundamental backdrop warrants some caution before positioning for a further appreciating move for the GBP/JPY cross.

GBP/JPY

Overview
Today last price	194.88
Today Daily Change	1.26
Today Daily Change %	0.65
Today daily open	193.62

Trends
Daily SMA20	191.78
Daily SMA50	190.86
Daily SMA100	187.71
Daily SMA200	185.73

Levels
Previous Daily High	193.64
Previous Daily Low	192.42
Previous Weekly High	192.84
Previous Weekly Low	190.3
Previous Monthly High	193.54
Previous Monthly Low	187.96
Daily Fibonacci 38.2%	193.17
Daily Fibonacci 61.8%	192.88
Daily Pivot Point S1	192.81
Daily Pivot Point S2	192
Daily Pivot Point S3	191.58
Daily Pivot Point R1	194.04
Daily Pivot Point R2	194.45
Daily Pivot Point R3	195.26

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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