GBP/JPY takes a breather at the top end of 13-day win streak

• GBP/JPY is middling on Thursday, pausing after a 13-day climb.
• Data for both currencies remains limited, but UK elections could spark volatility.
• Japanese Yen likely to continue deflating as BOJ remains stubbornly easy on policy.

GBP/JPY is taking a breather after stellar 13-consecutive-trading-day win streak, holding close to the high end of a 3.5% bottom-to-top near-term rally. Meaningful economic data is absent from the economic calendar on Thursday. Still, upcoming UK Parliamentary Election results could spark moves in either direction as traders tend to reward political upheaval with an overall uptick in volatility.

A 14-year run for the UK’s Conservative Tory party is set to end on Thursday, as early entry polls heading into the election noted an extreme likelihood of a sweeping victory for the UK’s Labour Party. Labour’s Keir Starmer is set to replace incumbent UK Prime Minister Rishi Sunak as the British populace looks set to pivot away from the party that has struggled since strongarming Brexit across the finish line. 

Japanese economic data is firmly low-tier for the remainder of the trading week, and the Yen is doomed to continue spiraling lower as the still-wide interest rate differential between the JPY and most other major currencies is an unavoidable hurdle to Japanese policymakers that have been attempting to intervene in market flows with threats of direct intervention for weeks. Effects of verbal intervention have fully decayed as the Yen sinks to multi-year, and in some cases, multi-decade lows across the board.

GBP/JPY technical outlook

Topside technical barriers have all evaporated as GBP/JPY continues to grind into fresh 16-year highs regularly, and the pair is sticking close to the high end after cracking above the 206.00 handle this week.

The Guppy is buried deep in bull country in a long-term one-sided trend. The pair has traded almost exclusively north of the 200-day Exponential Moving Average (EMA) currently rising through 190.80 since climbing above the long-term moving average in the first quarter of 2023.

It would take an 8% decline to drag GBP/JPY black into bearish territory below the key moving average, and the pair has closed in the green on a week-on-week basis for all but five of the last 26 trading weeks, and is on pace to chalk in a 26th.

GBP/JPY daily chart