GBP/JPY Price Analysis: Breaks above 162.00 and prints a fresh two-week high on mixed mood

• The GBP/JPY extends its weekly gains up by 1.14%.
• Sentiment begins to shift positively, which could propel the GBP higher.
• GBP/JPY Price Forecast: Upward biased, but facing solid resistance around 162.18.

The British pound gains against the Japanese yen, albeit a risk-off market mood that usually benefits the Japanese yen, but the rally in the USD/JPY weighed on the JPY. At 162.31. the GBP/JPY gains some 0.20% as the Asian Pacific session begins.

Sentiment begins to shift positively but remains mixed

Asian equity futures fluctuate, portraying a mixed open. Meanwhile, US equities are rising, illustrating that month-end flows were the main reason for a dismal market mood. Sentiment-wise, any news from China regarding the coronavirus could shift market players’ mood. Additionally to the aforementioned, traders need to be aware of the release of China’s Caixin PMI for May, expected at 48, with April’s reading at 46.

The GBP/JPY Tuesday’s price action shows that the cross-currency opened near the 161.30s, 40 pips above the 160.94 daily low. However, the pair jumped as the JPY weakened, undermined by rising US Treasury yields, and underpinned the greenback. So, the GBP/JPY broke Tuesday’s early high at 161.95 and rallied 40 pips further, reaching a weekly high around 163.35.

GBP/JPY Price Forecast: Technical outlook

The GBP/JPY remains upward biased and poised for a re-test of April’s 28 daily high around 164.25. However, the cross-currency would face a wall of resistance levels on its way north. Nonetheless,  the Relative Strength Index (RSI) above the 50-midline in the bullish territory has enough room to spare before reaching overbought conditions.

Therefore, the EUR/JPY first supply zone would be May 9 high at 162.18. Break above would expose May 5 daily high at 163.57, followed by May 2 cycle high at 163.89. Once cleared, the EUR/JPY could rally towards April’s 28 cycle high at 164.25.

On the flip side, the GBP/JPY first support would be the 50-DMA at 161.70. A breach of the latter would expose May 31 low at 160.94, followed by May 30 daily low at 160.25.