The GBP/JPY pair reached a fresh 16-year high on Wednesday, extending its impressive winning streak for the fourth consecutive day. This surge is fueled by the Japanese Yen’s (JPY) persistent weakness, despite increasingly stern warnings from Japanese policymakers regarding its rapid depreciation.
Market Drivers: BoJ Inaction and Yen’s Vulnerability
- Warnings from Japanese Officials: Masato Kanda, Japan’s Vice Finance Minister, expressed serious concern about the Yen’s recent decline, hinting at potential intervention. However, markets seem unimpressed as they await concrete policy actions from the Bank of Japan (BoJ) and the Ministry of Finance (MoF).
- BoJ Policy Uncertainty: The BoJ’s inaction on monetary policy tightening, coupled with its ongoing quantitative easing (QE) program, has contributed to the Yen’s weakness.
- Upcoming Data Releases: Key economic data, including Japanese Retail Trade figures and the BoE’s Financial Stability Report, are due this week, followed by the Japanese Tokyo CPI inflation data and the UK’s revised Q1 GDP next week.
Technical Analysis: GBP/JPY Faces Limited Resistance
The GBP/JPY pair has shown remarkable strength, with daily candlesticks recording eight consecutive gains. The pair is currently trading well above the 200-hour Exponential Moving Average (EMA) and has gained 2% from its recent swing low.
With limited technical resistance levels ahead, the pair could continue its upward march towards 204.00. The GBP/JPY has already climbed an impressive 13% in 2024 and has closed in the green for six consecutive months.
Key Takeaways:
- The GBP/JPY pair is hitting new 16-year highs due to the Yen’s persistent weakness.
- Japanese policymakers’ warnings of intervention haven’t deterred the pair’s upward momentum.
- Upcoming economic data releases and potential policy changes from the BoJ will be crucial for determining the pair’s future direction.
- The technical outlook remains bullish, with limited resistance levels in sight.
