GBP/JPY resumes rally and rises to 8-week highs

• GBP/JPY heads for the highest close in 2 two months.
• An ongoing rally in GBP/USD and a weaker JPY continues to support the pair.

After taking a pause on Friday, the GBP/JPY resumed the upside and climbed to the highest level since July 19 at 147.34. Price remains near the top, consolidating above 147.00.

The pair extended the rally and since last Monday gained almost 400 pips. It is being supported by a rally in GBP/USD, on the back of a weaker US dollar and also amid some improvement in the sentiment toward Brexit risks. Another key factor has been the move to the downsides in the yen, weakened by higher equity prices and also higher US yields. The 10-year yield hits levels on top of 3.0% today.

GBP/JPY Technical outlook

The short-term tone continues to point to the upside, and it has been reinforced after breaking last week a downtrend line. On Friday it pulled back to the line and today resumed the upside, making a clear break of the 146.90/1470.00. To the upside, resistance levels could be seen at 147.60 (Jul 13 low), 147.80 and 148.10/15.

Momentum remains positive with short-term technical indicators approaching extreme levels. A slide below 146.20/00 would remove the upside pressure. Under that area, support levels might be seen at 145.70 and 144.60.