GBP/JPY Price Analysis: Edges lower to mid-183.00s, bullish bias remains

• GBP/JPY trades with a mild negative bias through the Asian session on Tuesday.
• Intervention fears lend some support to the JPY and exert pressure on the cross.
• The fundamental and technical setup still seems tilted in favour of bullish traders.

The GBP/JPY cross struggles to capitalize on its gains recorded over the past two days and edges lower during the Asian session on Tuesday. Spot prices currently trade around mid-183.00s and remain well within the striking distance of the highest level since December 2015 touched last Friday.

Speculations that Japanese authorities will intervene in the markets to stem any further weakness in the domestic currency act as a headwind for the GBP/JPY cross. That said, a big divergence in the monetary policy stance adopted by the Bank of Japan (BoJ) and other major central banks continues to undermine the Japanese Yen (JPY). This, in turn, lends some support to the cross and warrants some caution before positioning for any meaningful corrective decline.

Furthermore, the lack of selling suggests that the strong rally witnessed since late March is still far from being over and supports prospects for an extension of the well-established uptrend. Hence, the recent range-bound price action might still be categorized as a consolidation phase. That said, technical indicators on the daily chart are still flashing overbought conditions and holding back bullish traders from placing fresh bets around the GBP/JPY cross.

The aforementioned technical setup makes it prudent to wait for some near-term consolidation or a modest pullback before positioning for any further gains. In the meantime, the multi-year peak, just ahead of the 184.00 round figure, might now act as an immediate resistance. A sustained strength beyond has the potential to lift the GBP/JPY cross towards the next relevant hurdle near the 184.60 region en route to the 185.00 psychological mark.

On the flip side, the 183.00 round figure is likely to protect the immediate downside. Any subsequent decline might be seen as a buying opportunity and remain limited near the 182.60-182.55 horizontal support. That said, some follow-through selling could drag spot prices further towards the 182.10-182.00 area, which if broken decisively could pave the way for a slide towards the 180.55-180.50 area with some intermediate support near the 181.00 mark.

GBP/JPY 4-hour chart

Key levels to watch