GBP/JPY stabilises in mid-151.00s, with the bears still eyeing an eventual drop to 149.00 support

• GBP/JPY has enjoyed some much-needed stabilisation in the mid-151.00s as global equities consolidate, having taken a beating in previous sessions.
• Bears targeting an eventual move to 149.00 support likely won’t lose heart in wake of Tuesday’s very modest rebound.

Though it hasn’t been quite the turnaround Tuesday that some of the GBP/JPY bulls would have been hoping for, the pair has enjoyed some much-needed stabilisation as global equities consolidate, having taken a beating in previous sessions. At current levels in the 151.60s, the pair is trading with gains of about 0.4% on the day and is above the mid-point of the day’s 151.00-152.00 ranges, having found good support in the form of Monday’s lows at 151.00.

Whether or not Tuesday’s respite can translate into a broader recovery over the course of the remainder of the week is the main question that traders will be asking. From a technical perspective, a rally back above 152.00 shouldn’t be too much of a difficulty, with a break above resistance just under 153.00 the real challenge. Prior to last Friday, this had been a key level of support so far in 2022.

As the West continues to tighten the sanctions noose around Russia’s economy (the US announced a ban on all Russian oil imports and the UK announced steps to phase out oil imports this year), the recent commodity price surge may have legs. That might prevent any lasting rebound in risk-sensitive assets (like GBP/JPY) as market participants continue to fret about stagflation. Short-term bears targeting an eventual move to test 149.00 support in the coming days/weeks likely won’t lose heart in wake of Tuesday’s very modest rebound. Indeed, GBP/JPY is still down more than 1.5% on the month.