The GBP/JPY is one of the more volatile currency pairs and usually provides ample movement and potential opportunities.
In the past few weeks, Yen weakness and resurgent GBP have led the pair higher since bottoming out on February 7 at around the 187.00 handle.
This came about despite increased hopes of further Bank of Japan (BoJ) rate hikes later this year. Bank of Japan (BoJ) Governor Kazuo Ueda said on Wednesday that the central bank will keep raising interest rates if the economy and prices grow as expected. Additionally, strong wage increases for the third year in a row are fueling hopes for more rate hikes by the BoJ.
Meanwhile developments across the pond in the UK suggest further rate cuts may be in offing after the Office for National Statistics reported on Wednesday that the UK's main inflation rate (CPI) rose 2.8% in February compared to a year ago, down from 3.0% in January. This was lower than the 2.9% economists had predicted. Core inflation, which removes changes in food and energy prices, increased by 3.5% in February, less than the 3.7% seen in January and below the expected 3.6%.
All in all its supposed to read a weaker GBP as rate cuts are expected and JPY strength as rate hikes are planned. However this is not how price action has developed over the past few weeks.
Price action and chart patterns are hinting at a major bullish rally for GBP/JPY so let us see what the charts look like.
Technical Analysis - GBP/JPY
GBP/JPY Daily Chart, March 27, 2025
From a technical standpoint, GBP/JPY on a daily timeframe has staircased its way higher since February 7.
The pair has been trading in a massive symmetrical triangle pattern with a breakout today looking likely.
Trading triangle patterns requires patience, however there is definitely a setup brewing.
A daily candle close above the triangle pattern will be the signal for triangle pattern setup based on the rules. However given the fickle nature of markets in recent times, there is a possibility of a short-term pullback and for that we need to take a look at the H4 chart for potential areas of interest to pay attention to.
GBP/USD Four Hour Chart, March 27, 2025
Dropping down to a four-hour chart and we have just printed fresh highs which could lead to a potential pullback.
However, there is also the possibility that the pair rises further before any pullback comes to fruition.
The period 14 RSI is also just short of being in overbought territory.
A pullback to the March 26 low around the 193.50 handle may provide bulls with an even better entry following the triangle breakout. If this level fails to hold, a deeper pullback toward the swing low at 192 may be in the offing.
Either way if the triangle pattern does play out, the potential move could take GBP/JPY to highs of around 222.00, last reached before the global financial crisis in December 2007.
A mega move if there ever was one.
Support
- 194.00
- 193.50
- 192.00
- 190.00
Resistance
- 197.50
- 198.96
- 200.00
- 201.65