GBP/JPY eyes a sustained break above 154.75 amid impending bear cross

• GBP/JPY is looking to extend the recovery momentum towards 155.00.
• The hawkish Fed-led rally in USD/JPY outweighs the cable’s downside.
• 50-DMA is set to cross the 100-DMA to the south, RSI stays bearish.

GBP/JPY is building onto the three-day upbeat momentum, as bulls eye a sustained move above the recent range highs near 154.75.

The ongoing recovery rally in the cross could be attributed to the hawkish Fed outlook on the interest rates and balance-sheet reduction, which has taken USD/JPY sharply higher alongside the US dollar and the Treasury yields.

Further, a big beat on the US Q4 annualized GDP data also bolstered the dollar’ rally, aiding the bullish undertone seen in the USD/JPY pair, as well, as GBP/JPY.

Meanwhile, a sense of calm on the Russia-Ukraine crisis, with the US seeking to ease the diplomatic tensions has weighed on the Japanese yen’s safe-haven appeal, in turn, collaborating to the upside in GBP/jPY.

On the other side, looming Brexit and UK political uncertainty continue to keep the GBP bears alive and cheerful. The Irish Democratic Unionist Party’s (DUP) First Minister Paul Givan said that the UK must take action if the European Union (EU) agreement cannot be reached by February 21.

Meanwhile, members of the UK PM Boris Johnson’s Conservatives party are considering their options, as pressure mounts on Johnson over his involvement in the violation of government rules during the covid lockdown in the country.

Looking ahead, markets will remain focussed on the geopolitical developments and UK political news ahead of the US PCE inflation release.

GBP/JPY: Technical outlook

From a short-term technical perspective, GBP/JPY is trying hard to extend the upside towards 155.00 but bulls remain cautious amid a looming bear cross on the daily sticks.

The 50-Daily Moving Average (DMA) is on the verge of cutting the 100-DMA for the downside, which will flash a bearish signal.

The 14-day Relative Strength Index (RSI) is edging higher but still remains below the midline, suggesting that the upside attempts could face stiff resistance.

GBP/JPY daily chart

Immediate resistance is seen at 154.75, above which the 155.00 round level will get tested.

On the downside, the daily lows of 154.26 will come into play before the bears target the previous day’s low of 153.82.

GBP/JPY additional levels to watch