GBP/JPY – Bullish Continuation vs. Head and Shoulders

GBP/JPY - Bullish Continuation vs. Head and Shoulders

The British Pound was getting bids after Carney delivered the BoE’s semi-annual Financial Stability Report. The bank’s governor addressed the need to cool off the mortgage market, with a proposal to cap lending to 4.5x borrower income, with those above this threshold not to exceed 15% of mortgage lending.

Summary: So far the GBP is liking it. The GBP/JPY is breaking above a falling trendline from last week after it failed to close above 174.00. The 4H RSI held above 40 for the most part. This reflects maintenance of the bullish momentum. The 4H moving averages (200-,100-,50-) are also still in bullish alignment. A break out would thussignals bullish continuation toward 174, and possibly the high on the year around 174.83. However, traders are keepgin GBP/JPY within a falling channel, and the focus could be on a head and shoulders scenario. Perhaps as the GBP/JPY trades at the crossroad, the USD/JPY can provide some clues in regards to JPY- strength.

gbpjpy 1h chart
(gbpjpy 1h chart, 6/26)

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