GBP/JPY Price Forecast: Momentum cools as cross holds above key support

GBP/JPY trades broadly flat on Thursday after Wednesday’s modest pullback ended a four-day winning streak. At the time of writing, the cross trades around 216.45, with momentum indicators suggesting limited buying interest.

The Japanese Yen (JPY) stays broadly weak as concerns over Japan’s fiscal outlook and its relatively low interest rates compared with other major economies continue to weigh on the currency. This keeps the broader bias for GBP/JPY tilted to the upside.

That said, sentiment around the British Pound (GBP) also remains somewhat fragile, with UK fiscal concerns elevated ahead of the October 28 Budget. At the same time, the Bank of England’s (BoE) cautious stance and reluctance to raise interest rates further are limiting additional support for the Pound.

In the near term, GBP/JPY is likely to remain in consolidation mode, with Tokyo Consumer Price Index (CPI) data due on Friday potentially providing the next directional catalyst.

Technical Analysis

On the daily chart, GBP/JPY maintains a mildly bullish bias, although the technical setup points to consolidation rather than a strong directional move. The cross holds above the 50-day, 100-day and 200-day Simple Moving Averages (SMAs), while also staying above the 61.8% Fibonacci retracement at 215.72, keeping the broader structure constructive.

Momentum indicators, however, remain subdued. The Relative Strength Index (RSI) hovers around 54, while the Moving Average Convergence Divergence (MACD) stays slightly above zero but shows fading positive momentum. At the same time, the Average Directional Index (ADX) near 17 points to a weak trend, supporting the case for near-term consolidation.

On the upside, initial resistance is seen at the 78.6% Fibonacci retracement at 217.40, followed by the recent swing high and 100% retracement at 219.50. On the downside, the 215.84-215.72 area, where the 50-day SMA meets the 61.8% retracement, offers immediate support. A break lower could expose the 100-day SMA at 215, followed by the 50% retracement at 214.54 and the 200-day SMA near 212.82.