GBP/JPY climbs to over one-week high, bulls have the upper hand above 162.00

• GBP/JPY continued scaling higher for the fourth successive day on Wednesday.
• The BoJ’s dovish stance continued weighing on the JPY and remained supportive.
• Modest USD pullback benefitted the GBP and contributed to the intraday move up. 

The GBP/JPY cross added to its intraday gains and shot to over a one-week high, beyond the 162.00 mark during the first half of the European session.

The cross prolonged last week's late recovery move from the 159.00 mark and gained some follow-through traction for the fourth successive day on Wednesday. The Bank of Japan Governor Haruhiko Kuroda reiterated on Tuesday that the central bank would offer to buy an unlimited amount of 10-year JGBs if the rise in long-term interest rates is rapid. This, in turn, continued weighing on the Japanese yen and acted as a tailwind for the GBP/JPY cross.

On the other hand, the British pound staged a goodish recovery from the multi-week low amid modest US dollar pullback from a nearly two-year high. This was seen as another factor that contributed to the bid tone surrounding the GBP/JPY cross. That said, the prevalent cautious mood should drive some haven flows towards the JPY. This, in turn, warrants some caution for aggressive bullish trades and should keep a lid on any meaningful gains for the cross.

The market sentiment remains fragile amid fading hopes for a diplomatic solution to end the war in Ukraine and the prospect of more Western sanctions on Russia over its alleged war crimes. Hence, the market focus will remain glued to fresh developments surrounding the Russia-Ukraine saga. The incoming geopolitical headlines will influence the risk sentiment, which will drive demand for the safe-haven JPY and provide some impetus to the GBP/JPY cross.

From a technical perspective, sustained move back above the 162.00 mark could be seen as a fresh trigger for bullish traders. This, in turn, supports prospects for a move to test the next relevant resistance near the 162.70 region. Some follow-through buying beyond the 163.00 mark has the potential to lift the GBP/JPY cross towards the 164.00 round figure.

Technical levels to watch