British Pound (GBP) Price Outlook: GBP/JPY Closes in on Major Resistance Levels
The strength of the recent advance in GBP/JPY is facing a key test at the 156.11 high recorded on May 27 and it will likely pause at that level as traders decide whether to keep buying the pair. If it does break through, GBP will be at its highest level since early 2018.To get more news about fxprimus, you can visit wikifx.com official website.
Moreover, a further advance above the 156.62 high recorded in February that year would take GBP to its highest against JPY for more than five years, as shown on the weekly chart below.
On the GBP side of the equation, the Pound is benefiting from suggestions that the Bank of England could be the second major central bank, after only New Zealand, to tighten monetary policy in the current cycle. On the JPY side, Bank of Japan Policy Board member Noguchi Asahi said Thursday that he ruled out withdrawing stimulus even after the Japanese economy recovers from the hit caused by the Covid-19 pandemic.
That should keep the upward trend in GBP/JPY going longer-term, but the resistance levels mentioned earlier will likely cause at least a temporary barrier first.
As for sentiment, IG client figures show that 27.15% of traders using the companys platforms are net-long, with the ratio of traders short to long at 2.68 to 1. The number of traders net-long is 0.49% higher than yesterday but 13.50% lower than last week, while the number of traders net-short is 2.42% higher than yesterday and 33.50% higher than last week.
Here at DailyFX, we typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBP/JPY prices may continue to rise. Moreover, traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger GBP/JPY-bullish contrarian trading bias.