GBPJPY has been moving back and forth between support around the 138.50 and the range resistance at 147.50-148.00 visible on the daily time frame.

Price is currently testing the resistance and could be due for a drop back to support. Stochastic is indicating overbought conditions, which means that sellers could take over while buyers take a break. 

However, the 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. This means that the resistance is more likely to break than to hold, possibly sending the pair up by 900 pips or the same height as the rectangle pattern. 

The yen has been giving up ground against its rivals recently on the BOJ’s dovish monetary policy stance and the rise in US bond yields. Japan’s average cash earnings figure and the leading indicators are lined up for release and strong data could still shore up demand for the Japanese currency.

Another event risk for the yen is the upcoming US jobs report which might influence bond yields. Strong results could draw traders back to US assets and out of the yen while weak figures could renew yen gains. As for the pound, UK manufacturing and industrial production figures are due, with analysts expecting to see stronger gains this time. 

By Kate Curtis from Trader’s Way