GBP/JPY Price Pauses Ahead of 158 amid Political Woe, Double Top
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- The GBP/JPY currency pair continues to rise towards 158.00.
- As a result of the UK administration’s failure to follow FDA regulations, Johnson bears the brunt of the blame.
- Traders will wait for the release of the US Producer Price Index, further Coronavirus news from the UK, and political developments.
With the US dollar falling sharply and the UK’s political upheaval overshadowed, the GBP/JPY price has approached the 3-month high of 157.70.
Now that the dollar has been shattered by sell-off, it is licking its wounds, and this is expected to continue as the data on US inflation continues to come in tight. CPI in the US increased by 7.0% y/y in December, in line with market expectations.
A drop in the dollar could also contribute to the mounting political pressures in America associated with 40 years of high inflation. As a result, it has accompanied the USD/JPY pair correction as it is now trading near the 114.50 level from the previous day’s 115.50 level.
While the pound sterling is holding up against the looming political tower in the UK, Prime Minister Boris Johnson broke his administration’s coronavirus-related rules at a garden party during the country’s first lockdown in 2022.
Traders will wait for the release of the US Producer Price Index, further Coronavirus news from the UK, and political developments on both sides of the Atlantic before getting back to business.
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GBP/JPY price technical analysis: Double top to resist gains
The GBP/JPY price paused is rally ahead of 158.00 and fell back to 157.10. The chart shows a widespread down bar closing near the lows. This is an earlier sign of bearish reversal. The pullback stopped around 157.00 handle near the 20-period SMA on the 4-hour chart. We may also see a double top pattern on the chart around 157.70 area. Overall, the price stays within a rectangle, indicating choppy behavior.
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After seeing a long rally, we may observe some pullback or retracement towards the lower end of the range. Therefore, it is advised to wait for a decisive breakout on either side to catch a decent trading opportunity.
