FX.co ★ GBP/JPY dynamics scenarios on September 11, 2023

The statements from Bank of Japan Governor Kazuo Ueda over the weekend led to a sharp strengthening of the yen during today's Asian trading session. Ueda stated that the central bank will now focus on a smooth exit. Market participants interpreted his words as a signal of possible interest rate hikes.

The yen strengthened against virtually all currencies, including the British pound.

The GBP/JPY pair opened today's trading day with a 85-point downward gap, reaching an important support level (50 EMA on the daily chart) and the 182.67 mark.

However, with the start of the European trading session, the decline turned into an ascent for GBP/JPY, and now the pair is breaking through the important short-term resistance level at 183.60 (200 EMA on the 4-hour chart) to resume its upward momentum.

Overall, since June 2020, GBP/JPY has been trading in a long-term upward trend, also staying within the global bullish market zone, above key support levels of 158.80 (200 EMA on the weekly chart) and 160.50 (200 EMA on the monthly chart).

Therefore, a confirmed breakout above the resistance level at 183.60 will be the first signal to resume long positions, with a break of the important short-term resistance level at 184.32 (200 EMA on the 1-hour chart) confirming it.

In an alternative scenario, the price may still break through the support levels of 182.80 and 182.67 and continue to decline. It's difficult to determine how much negative momentum it will have, given the sustained upward bullish trend of the pair, fueled in part by the growing differential of conditional yield curves reflecting the dynamics of interest rates in Japan and the United Kingdom.

For now, long positions remain preferable, and short positions are considered only as a short-term alternative.

Regarding the economic calendar, volatility in the GBP/JPY pair is expected to rise sharply again on Tuesday at the beginning of the European trading session on the release of updated labor market data from the UK's Office for National Statistics at 06:00 (GMT).

Support levels: 183.00, 182.80, 182.67, 176.45, 173.70, 172.40, 162.00, 160.45, 158.80

Resistance levels: 183.60, 184.00, 184.32, 185.00, 186.00, 186.75