GBP/JPY pinned to the high side as Yen market flows reverse direction

The GBP/JPY has climbed over 1.3% on Wednesday as the Pound Sterling (GBP) recovered recently lost ground against the Japanese Yen (JPY), rising from a two-week low near 178.75 to come within challenge range of the 182.00 handle.

FX market flows are broadly pivoting out of JPY bets, driving the Japanese Yen down across the board and making the JPY handily the worst performer of the major currency bloc for the mid-week. 

The Yen is kicking off 2024 with a broad-base selloff as equity pours out of the Yen in favor of higher-yielding assets with the Bank of Japan (BoJ) firmly entrenched in their hypereasy monetary policy stance.

The Asia market session saw moderating risk appetite on Tuesday following China’s unexpected beat in Chinese Manufacturing Purchasing Managers’ Index (PMI) figures, coming in at 50.8 for December compared to November’s 50.7, a small gain but upending market forecasts of a decline to 50.4. With the Chinese Services PMI due early Thursday, a joint beat of PMI figures could see risk sentiment broadly hold higher heading into the back half of the first trading week of 2024.

GBP/JPY Technical Outlook

The Guppy’s Wednesday surge has the GBP/JPY easily clearing the 200-hour Simple Moving Average (SMA) near 180.50 as the pair gears up for a fresh run at the 182.00 handle. Despite the mid-week surge, the GBP/JPY remains firmly down from recent swing highs into 184.00 from mid-December.

Daily candlesticks reveal potential for an extended topside run after a bounce from the 200-day SMA near 179.50. The GBP/JPY could be geared for a challenge of the 50-day SMA near the 184.00 handle with the pair seeing a bullish rejection from the 200-day SMA for the first time since breaking into the high side of the long-term moving average back in April of 2023.

GBP/JPY Hourly Chart

GBP/JPY Daily Chart

GBP/JPY Technical Levels