GBP/JPY rises above 183.00 ahead of ECB forum speeches

• The GBP/JPY rose to 183.70, its highest since December 2015.
• GBP gained appeal on the back of rising Gilts ahead of BoE Bailey's speech on Wednesday.
• All eyes will also be set on Governor Ueda and Jerome Powell’s words on Wednesday.

The GBP/JPY pair soared to its highest level since December 2015 at 183.70 on Tuesday. The appreciation of GBP can be attributed to several key factors, including the rise in Gilts ahead of the upcoming speeches by prominent figures such as Governor Andrew Bailey, Governor Kazuo Ueda, and Chairman Jerome Powell. Investors will look for clues regarding the main central banks’ next steps in their respective monetary policy movements.

Ahead of Bailey’s speech, the British 2-year Bond yield rose to multi-year highs

After the Bank of England (BoE) surprised markets by announcing a 50 basis points hike and hinting at more rises in 2023, the Sterling gained significant interest. However, investors are worrying about the UK sliding into a recession, so any forward guidance or clues regarding the BoE’s next steps may generate volatility in Sterling’s price dynamics. 

As for now, the 2-year British Bond yield rose to 5.23%, its highest since 2008 making the Pound trade with gains against some of its major rivals including the USD, CHF and JPY. 

On the flip side, market participants will be watching Bank of Japan (BoJ) Governor Ueda’s Wednesday speech with interest. In the last June meeting, the BoJ maintained its ultra-dovish stance as their objective is to see wages increase rather than rein in inflation. In that sense, yield divergence and the BoJ stance made the JPY lose interest and weaken against most of its rivals.

GBP/JPY Levels to watch

According to the daily chart, the technical outlook for the GBP/JPY is clearly bullish in the short term. However, the cross tallied a fifth consecutive day of gains and its technical indicators continue to point at overbought conditions suggesting that a downwards correction may be on the horizon.

Resistance levels to watch: 184.00,184.50,185.00.
Support levels to watch: 182.50 ,181.70, 180.00.

GBP/JPY Daily chart