GBP/JPY Price Analysis: An eight-day rally extends, but solid resistance lies around 164.00

• The GBP/JPY began the week on the right foot, up some 0.90%.
• The 10-year bond differential between the UK – and Japan would keep the GBP/JPY underpinned to the upside.
• GBP/JPY Price Forecast: In a strong uptrend, but a higher RSI reading suggests the pair might consolidate before relaunching an attack towards 164.00.

On Monday, the GBP/JPY reached a fresh weekly high just short of the 164.00 mark but retreated towards the 163.20 area amid a downbeat market mood that put a lid on the GBP, despite a dismal session for the Japanese yen. As the Asian Pacific session begins, the GBP/JPY upticks 0.08% and trades at 163.44 at press time.

Meanwhile, US equities finished the day with losses, and Asian stock futures followed the lead, recording losses between 0.16% and 2.49%, except for the Nikkei 225, almost flat, up 0.03%. Global bond yields rose, led by US Treasury yields. In the case of the GBP/JPY, the UK 10-year Gilt rose ten basis points, sitting at 1.846%, while the 10-year JGB remains contained by the BoJ, around the 0.25% mark.

Overnight, the GBP/JPY rallied since the beginning of the Asian session and recorded a daily high at 163.84, followed by a retracement towards the 163.40s area.

GBP/JPY Price Forecast: Technical outlook

The GBP/JPY uptrend remains. The daily moving averages (DMAs) below the exchange rate have an upslope and signal that the uptrend is solid. Nonetheless, the Relative Strength Index (RSI) at 72.32, within overbought conditions, might suggest that the GBP/JPY is about to consolidate in the near term.

IF the GBP/JPY keeps trending up, the first resistance would be 164.00, which, once cleared, would open the door for further substantial gains. The next resistance would be November 2015 swing highs around 188.80, followed by June’s 2015 cycle highs around 195.88.

On the flip side, the GBP/JPY's first support would be March 29 resistance-turned-support at 162.71, then April 11 lows at 161.66, and then the 160.00 mark.

Technical levels to watch