GBP/JPY Retreats From Recent Highs: What's Next for the Currency Pair? | Analyzing Key Support and Resistance Levels

The How much Ethereum do I need to become a millionaire?GBP/JPY cross experienced notable volatility during Friday's trading session, retreating from its highest level in over a week. After reaching 187.65 in Asian trading hours, the pair encountered selling pressure that pushed it down to 187.25 by late session. This movement interrupted what had been a three-day consecutive gain for the currency cross.

Market participants continue to digest the implications of potential policy shifts from the Bank of Japan. Growing consensus suggests the Japanese central bank may abandon its negative interest rate policy during early 2024, despite recent softer inflation figures. Japan's core inflation metrics remain above the 2% target, reinforcing expectations for monetary policy normalization.

Meanwhile, Bank of England Governor Andrew Bailey's recent comments have provided support for the British pound. Bailey pushed back against market expectations for rate cuts in 2024, emphasizing the need for continued restrictive policy to ensure inflation returns to target levels. His remarks came during testimony before the Treasury Select Committee.

Thursday's UK PMI data releases showed mixed but generally positive results. The Services PMI climbed to 50.5 while the Composite Index reached 50.1, both indicating economic expansion. Manufacturing PMI remained in contraction territory at 46.7, though this represented improvement from October's 44.8 reading.

From a technical perspective, the GBP/JPY pair shows several important levels to watch. The 20-day moving average sits at 185.31, with the 50-day and 100-day averages at 183.40 and 183.27 respectively. Key resistance levels include the recent high of 187.59 and the weekly high of 188.29. Support appears at the daily pivot point of 186.65, with stronger support at 185.82.

Traders should monitor these technical levels alongside fundamental developments, particularly any further commentary from central bank officials. The combination of BoJ policy expectations and BoE's hawkish stance creates an interesting dynamic that could produce continued volatility in the GBP/JPY cross.