GBP/JPY Price Analysis: To test 159.00 as a bullish harami emerges

• GBP/JPY rebounds at weekly lows and is forming a bullish harami, suggesting that prices could aim higher.
• Immediate resistance levels for the GBP/JPY lie at 159.00, ahead of the 20-DMA and 160.00.
• For a bearish continuation, the GBP/JPY needs to clear 157.42, aiming to reach 157.00.

The Pound Sterling (GBP) trims some of Tuesday’s losses, and climbs toward the 158.50 area on Wednesday, boosted by an upbeat sentiment across the financial markets. A speech by the Federal Reserve Chair Jerome Powell spurred a risk-on impulse and weakened safe-haven peers. At the time of writing, the GBP/JPY exchanges hands at 158.53.

GBP/JPY Price Analysis: Technical outlook

The GBP/JPY bounced from weekly lows reached on Tuesday at around 157.42, with the cross-currency pair testing a one-month-old downslope previous resistance trendline, which turned support and capped the GBP/JPY’s fall. However, as shown by the daily chart, GBP/JPY’s price action would remain sideways, though tilted downwards, as long as the long-term moving averages stay above the exchange rate.

For the GBP/JPY pair to continue its bearish path, it would need to break below the weekly low of 157.42, which, once cleared, would send the GBP/JPY sliding toward the February 3 low of 156.72. A breach of the latter and the 156.00 figure is up for grabs.

As an alternate scenario, the GBP/JPY key resistance areas lie at the 20-day Exponential Moving Average (EMA) at 159.42, followed by the 160.00 psychological level. Break above and the GBP/JPY could rally and test the 50-day EMA at 160.96.

GBP/JPY key technical levels