GBP/JPY imminent breakout

The GBP/JPY pair seems undecided in the short term, that's why we have to wait for fresh opportunities. It's located at 183.10 at the time of writing. In the short term, it could extend its range. The Japanese Yen Futures' deeper drop could force the JPY to lose ground versus its rivals.

Fundamentally, we had some volatility after the UK CPI reported a 6.7% growth, less compared to the 7.0% growth expected, while Core CPI registered only a 6.2% growth versus the 6.8% growth forecasted. On the other hand, the Japanese Trade Balance came in at -0.56T versus the -0.44T estimated. Tomorrow, the BOE is seen as a high-impact event and could be decisive. The Official Bank Rate could be increased to 5.50% from 5.25%. On the contrary, the BOJ could keep the Policy Rate unchanged at -0.10%.

As you can see on the H1 chart, the rate registered only false breakdowns with great separation below the 182.67 - 182.51 area, signaling exhausted sellers.

Now, it challenges the downtrend line, which represents a dynamic resistance. The weekly pivot point of 183.31 stands as a static obstacle.

Staying below the downtrend line and making a new lower low activates more declines.

Jumping and closing above the downtrend line and above the pivot point of 183.31 is seen as a bullish signal.