GBP/JPY bulls flirt with weekly high, await sustained strength beyond 157.00 mark

• GBP/JPY refreshed weekly high on Wednesday and was supported by a combination of factors.
• Receding Russia-Ukraine tensions undermined the safe-haven JPY and extended some support.
• Rising bets for additional BoE rate hikes benefitted the GBP and provided an additional boost.

The GBP/JPY cross maintained its strong bid tone through the mid-European session, with bulls now looking to build on the momentum further beyond the 157.00 round-figure mark.

A combination of supporting factors assisted the GBP/JPY cross to gain positive traction for the second successive day on Wednesday and build on this week's goodish rebound from the 155.30 area. Receding fears about an imminent Russian invasion of Ukraine undermined the Japanese yen's safe-haven status. On the other hand, the British pound benefitted from hotter-than-expected UK consumer inflation figures.

In fact, the headline UK CPI edged higher from 5.4% to 5.5% YoY in January, marking the fastest annual pace in nearly 30 years. Against the backdrop of Tuesday's stronger UK wage growth data, this further strengthened the case for additional interest rate hikes this year by the Bank of England. This, in turn, provided an additional boost to the GBP/JPY cross and contributed to the intraday positive move.

That said, tensions over the Northern Ireland Protocol of the Brexit agreement held back traders from placing aggressive bullish bets around sterling and capped gains for the GBP/JPY cross. Hence, it will be prudent to wait for some follow-through buying before traders start positioning for a further near-term appreciating move back towards testing 2022 high, around the 158.00 mark touched last week.

Technical levels to watch