GBP/JPY surges in major channel

Source: Dukascopy Bank SA


The Pound has been surging against the Japanese Yen since March in a channel up pattern. The pattern captures the difference between the central bank policies of the two currencies. The Bank of England has been hiking rates and combatting inflation. The Bank of Japan has been easing and weakening its currency.

Meanwhile, from a technical perspective the pair respects round exchange rate levels and the borders of the pattern. In theory, the surge of the pair should continue. A potential target for the surge could be the early 2015 high level at 190.00. Higher above, note the 2015 absolute high level at 195.85.

In the case of a decline, the pair is expected to first look for support in the combination of the 180.00 mark and the lower trend line of the channel up pattern. Only when the pattern is broken, the surge can be considered over. However, for that to occur, the central banks would have to change their policy, which is unlikely.
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