GBP/JPY: Ascending Triangle Under Pressure

The GBP/JPY pair has come under pressure after the Bank of Japan raised its policy rate to 1.0% on 16 June. The Bank of England is following the opposite path: at its 30 April meeting, the Monetary Policy Committee (MPC) voted 8–1 to keep the base rate at 3.75%, with one member advocating an increase to 4%. The June MPC meeting, scheduled for 18 June, is expected by analysts to result in another hold, as inflation remains above the target level. The narrowing interest rate differential between the two central banks continues to build a fundamentally supportive backdrop for the yen.

Technical Picture

On the 4-hour GBP/JPY chart, an ascending triangle structure can be observed: since 8 June, an upward-sloping support has been forming against a horizontal resistance near the red 215.60 level. On 17 June, a strong bearish candle formed on elevated volume, and price broke below the pattern as well as the current market profile. If the downward momentum continues, the next key level on the downside is 213.00, which represents the base of the pattern.

In the event of a reversal, price may find support at the lower boundary of the profile at 214.35 and the POC zone at 214.65–214.70. If the upward move resumes and buyers manage to break above the upper profile boundary at 215.20, the 215.60 resistance area would come back into focus. RSI + MAs shows readings of 35, 50, 51 — the oscillator is approaching oversold territory, while its moving averages remain in neutral conditions.

Key Takeaways

The narrowing interest rate gap between the Bank of Japan and the Bank of England is creating a fundamentally supportive environment for the yen. RSI is approaching oversold levels, although the MAs remain in neutral territory. The next directional move is likely to be driven by the Bank of England’s decision on 18 June.

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