On Tuesday, the British pound (GBP) made a slight gain against the Japanese yen (JPY), aided by an uptick in risk sentiment. The exchange rate climbed above 214.00, recovering from lows near 213.00 observed on Monday. However, signs suggest that this upward momentum might be losing steam.
The pound found some backing from a moderate appetite for risk, particularly after the cessation of hostilities in the Middle East and comments from US President Donald Trump, who hinted that a peace agreement with Iran is on the horizon. This week appears relatively quiet on the UK economic calendar, with attention turning to the manufacturing production and monthly gross domestic product (GDP) data set to be published on Friday. Meanwhile, Japan’s GDP figures released on Monday beat market predictions, bolstering expectations that the Bank of Japan (BOJ) will implement an interest rate hike following its monetary policy meeting next week.
Technical analysis: Weak bullish momentum
The GBP/JPY pair is currently priced at 214.07, displaying a generally bearish bias after dropping below the mid-May uptrend support line. The 4-hour Relative Strength Index (RSI) is trending down towards the mid-40s, while the Moving Average Convergence Divergence (MACD) hovers just beneath the zero line, indicating a neutral to bearish trend.
While the pound achieved its target in the double top formation at 215.55 and is experiencing some corrections to the upside, any upward movement may face resistance near the previous support level around 214.35, noted on June 3rd and 4th. Should there be further gains, the counter-trend line near 215.15 could act as a barrier before reaching the 215.55 mark.
Conversely, should the price fall below 213.35, recorded on May 21 and 28, it could pave the way to the low of 212.65 from May 19. A decline beyond this point would target the May 15 low of 212.30.
