GBP/JPY Price Analysis: Soars to six-year highs but retraces toward the 169.00 figure

• GBP/JPY climbs sharply by more than 250 pips on Monday due to fundamental reasons.
• Negative divergence in the GBP/JPY one-hour chart opens the door for a mean reversion move.

The GBP/JPY rallies to fresh six-year highs at 170.10 due to investors’ relief on the UK’s newest Finance Minister, Jeremy Hunt, ditching Kwarteng’s mini-budget as he tries to ease the markets. Therefore, the British pound soared against most G8 currencies, particularly the yen, gaining 290 pips. At the time of writing, the GBP/JPY is trading at 169.18.

GBP/JPY Price Forecast

On Monday, the GBP/JPY surged, extending its gains towards the 170.00 figure, but profit-taking around the area weighed on the pair, retracing toward the 169.00 figure. Worth noting that the GBP/JPY is trading above the previous 2022 high, reached on June 9 at 168.04, so a daily close above it could open the door for consolidation around 169.00-170.00.

Short term, the GBP/JPY one-hour scale price action registered a series of higher highs/lows, emphasizing the upward bias. Of note, the Relative Strength Index (RSI) printed successive series of lower peaks, forming a negative divergence, opening the door for a mean-reversion move.

Therefore, the GBP/JPY first support would be the R2 daily pivot at 168.34. The break below will expose the R1 pivot at 167.28, followed by the 50-EMA at 167.17.

GBP/JPY Key Technical Levels