GBP/JPY is currently in a consolidation phase after a remarkable 13-day winning streak. Economic data for both the British Pound and Japanese Yen is limited, but the upcoming UK elections have the potential to introduce volatility into the market.
The Japanese Yen is expected to continue depreciating as the Bank of Japan (BOJ) maintains an accommodative monetary policy stance. Despite verbal threats of intervention, the Yen continues to weaken against other major currencies, reaching multi-year and multi-decade lows.
On the other hand, the UK is witnessing a shift in political landscape with early polls indicating a potential victory for the Labour Party over the Conservative Tory party. This could lead to significant market movements post-election.
From a technical perspective, GBP/JPY has been consistently trading at multi-year highs, with the pair remaining above the 200-day Exponential Moving Average (EMA). It would require a significant 8% decline for the pair to enter bearish territory below the key moving average.
Overall, market dynamics suggest continued strength for GBP/JPY, with the potential for increased volatility around the UK elections. The Yen is likely to remain under pressure due to the BOJ’s monetary policy stance, further supporting the upward momentum of GBP/JPY.