GBP/JPY holds steady near multi-week high, 184.00 remains in sight ahead of UK macro data

• GBP/JPY sticks to modest intraday gains near the multi-week top touched earlier this Thursday.
• The BoJ’s dovish stance, a positive risk tone continues to undermine the JPY and lend support.
• Traders now look to the UK macro data before positioning for any further appreciating move.

The GBP/JPY cross now seems to have entered a bullish consolidation phase and is seen oscillating in a range just below a near four-week high touched during the Asian session this Thursday. Spot prices currently trade around the 183.70 region, nearly unchanged for the day, as traders move to the sidelines ahead of the UK data dump.

Thursday's UK economic docket highlights the release of the monthly GDP print along with Manufacturing and Industrial Production figures for August. The BoE surprisingly paused its rate-hiking cycle in September and provided little hints of its intention to raise rates. Hence, any disappointment from the UK macro data might reignite recession fears and lift market bets that the BoE will maintain the status quo in November. This could take its toll on the British Pound (GBP) and fail to assist the GBP/JPY cross to capitalize on its recent rally from the 178.00 mark, or over a one-month low touched earlier this October.

The downside, meanwhile, is more likely to remain cushioned in the wake of a more dovish stance adopted by the Bank of Japan (BoJ). In fact, the Japanese central bank retains its view that inflation is transient and has no plans to phase out its massive monetary stimulus. This, along with a generally positive tone around the equity markets, might continue to undermine the safe-haven Japanese Yen (JPY) and act as a tailwind for the GBP/JPY cross. This, in turn, suggests that the path of least resistance for spot prices remains to the upside and any intraday corrective decline might be seen as an opportunity for bullish traders.

From a technical perspective, momentum beyond the 184.00 round figure is more likely to confront stiff resistance near the 184.40 supply zone. The latter should act as a key pivotal point, which if cleared decisively will confirm the near-term positive outlook and pave the way for a further appreciating move.

Technical levels to watch