The British pound is holding up against the Japanese yen currency, despite the UK posting much weaker than expected data and the BOE maybe be preparing to wind back rate hikes.
GBPJPY has been boosted by pound strength and a drop in the yen after the BOJ meeting this week, where the new Bank of Japan Governor said he would be enforcing any rates hikes any time soon.
Governor Ueda said the challenge facing the bank is carrying on monetary easing and monetary stimuli which helped boost Japan out of recession.
Ueda also said raising interest rates aggressively in Japan right now is not tenable, with the BoJ doing all it can to stabilize price and the financial system, with markets already starting to calm down.
I believe with the fundamentals of these economies are increasingly interesting, and buying the GBPJPY could surge ahead if the Bank of Japan keep this line and the Bank of England hikes a few more times in 2023.
The ActivTrader Market Sentiment tool shows that just 12 percent of traders are bullish towards the GBPJPY pair right now. This goes strongly against the fundamentals based on policy alone.
However, the sentiment does not bode well for more gains in the GBPJPY pair as historical data has shown that fading one-sentiment skews amongst the retail crowd has proved to be lucrative.
GBPJPY Short-Term Technical Analysis
The four-hour time frame shows that the GBPJPY pair has broken above the Ichimoku Cloud and the lagging line is issuing a strong buy signal right now.
According to the Ichimoku Indicator the thin cloud is showing that support is weak, and the trend is not that strong despite the bullish bias on the four-hour time frame.
GBPJPY Medium-Term Technical Analysis
Looking at the daily time chart shows that the GBPJPY pair has invalidated a large head and shoulders pattern. The chart actually shows this as a major buy signal.
This Ichimoku indicator shows price above the Cloud and all three line, which is creating a strong buy signal for the GBPJPY pair. It is noteworthy that the signal is still quite premature.