GBP/JPY Aiming for Next Bullish Targets

GBPJPY is trending higher on its short-term time frames, finding support at a rising trend line that’s been holding since mid-November. Price is testing the trend line support and might be due for a bounce to the upside targets marked by the Fibonacci extension tool.

The 38.2% level is at 168.67, then the 50% level is at the 169.00 major psychological mark near the swing high. Stronger bullish momentum could take GBPJPY up to the 61.8% Fib at 169.35 or the 76.4% level at 169.76. The full extension is at 170.43.

The 100 SMA is above the 200 SMA to indicate that the path of least resistance is to the upside or that the uptrend is likely to gain traction from here. The 100 SMA also seems to be holding as dynamic support in line with the rising trend line.

Stochastic is already indicating oversold conditions or exhaustion among sellers, so turning higher would confirm that buyers are taking over. RSI has a bit more room to slide before reaching the oversold region, but the oscillator already seems to be pulling higher so GBPJPY might follow suit.

The UK printed stronger than expected PMI figures for November, as the manufacturing reading held steady at 46.2 while the services figure was also unchanged at 48.8. Analysts had expected sharper contractions for both industries, so the actual results likely brought some relief.

However, risk-off flows remain in play due to geopolitical tensions and persistent fears of a global recession. This could continue to keep the lower-yielding yen supported against most of its counterparts.

Also note that the UK economy is battling with strong inflation, which means that growth could still be derailed due to higher cost pressures and tightening measures from the central bank. Firms are already predicting subdued spending during the holiday season, which might mean another leg lower for the British currency.

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