GBP/JPY Targets Rise as Pound Gains on Strong Service PMI Data
Market Overview
Monday began in the UK with the early release of the December PMI services data, providing only a partial view of the month but still setting the tone for the pound’s performance. Sterling enters a pivotal week, bolstered by better-than-expected PMI readings, as market participants prepare for the final major economic reports of 2024 and the Bank of England’s rate decision later in the week.
Technical Analysis
On the hourly chart, GBP/JPY has maintained its upward trajectory, with buyers firmly in control after breaching the recent high at 194.567. The pair’s ascent is supported by bullish momentum, as prices above key moving averages, signaling sustained buying interest. The strong performance during London’s trading session has pushed GBP/JPY toward its immediate resistance level at 194.767. A decisive break above this resistance would likely accelerate gains, paving the way for the next targets at 195.021 and the significant barrier at 195.302.
Oscillators Confirmations
Momentum indicators further reinforce the bullish outlook. The RSI remains in a positive zone, underscoring continued demand for sterling, while the MACD displays mixed signals but tilts toward confirming upward momentum.
Alternative Scenario
Conversely, if sellers manage to regain control, they would need to push prices below the support level at 194.286. A breach of this level could expose GBP/JPY to further declines, targeting the next key support at 193.832, which would challenge the prevailing bullish narrative.
Key Levels
- Resistance Levels: 194.767, 195.021, 195.302
- Support Levels: 194.286, 193.832
Key Events to Watch
The week is packed with high-impact events for the pound. On Tuesday, the UK labor market report will offer insights into wage growth and unemployment trends, critical factors influencing the Bank of England’s rate decisions. Wednesday brings the UK’s inflation (CPI) report, expected to reveal whether inflationary pressures persist, potentially complicating monetary policy. Finally, Thursday’s Bank of England rate decision will conclude the week. While no change in rates is anticipated, the forward guidance will be closely scrutinized for future policy direction.
Conclusion
GBP/JPY remains firmly bullish, with the pair targeting resistance at 194.767. A breakout above this level would open the door to further gains, while a move below 194.286 could challenge the current uptrend. Economic releases, including UK labor and inflation data, will play a critical role in shaping price action this week.
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