The GBP/JPY pair rebounded and was trading at 173.55 at the time of writing. It's located far above the 172.67 today's low. After its sell-off, a short-term growth was natural. The rate could test and retest the immediate resistance levels.
Fundamentally, the Japanese Household Spending and Average Cash Earnings came in worse than expected. On the other hand, the UK Construction PMI came in at 51.6 points versus 50.9 points estimated and compared to 51.1 points in the previous reporting period.
GBP/JPY downside reversal?Technically, the GBP/JPY pair failed to stay below the 172.94 and under the S1 (172.86) and now it has come back to test and retest the broken uptrend line. This represents a dynamic resistance, while the weekly pivot point of 173.77 represents a static resistance.
As you can see on the H4 chart, the rate escaped from an up channel, which announced a potential downside reversal.
GBP/JPY outlookTesting and retesting the broken uptrend line, registering false breakouts may announce a new sell-off. Still, only a bearish closure below the S1 (172.86) activates more declines. This scenario is seen as a selling signal.
On the contrary, a valid breakout above the uptrend line and above the weekly pivot point (173.77) invalidates the downside scenario and signals further growth.