1 GBP is currently trading at ~155 JPY, which is an important touchstone for the pair. The GBPJPY last touched (and notably rejected) this level in December of 2017. Before this, a period of consolidation occurred just above this price level in early 2016, before dramatically breaking down to its lowest point in the twenty-tens.

An important question to ask is: Where is the pair headed in the second half of 2022?

Will the pair bounce off this important touchstone and head back down to a sub 155 price level? Or, will the GBP penetrate past this point and head for a price level circa above 160?

An early indication of whether the pair bounces off this touchstone or penetrates it can be found in the smaller time frame charts. At the H4, the bulls show early promise, with some intense upwards pressure at the end of May. The intense upwards pressure occurred after a prolonged period of range. A slight drawdown has predictably occurred after this push. However, the pair appears to be moving to the upside again after shaking off the early profit takers.

However, it is far too early to make a call either way.

Let’s look at some events are may affect the trajectory of the pair in the near future. Two important events that I am keeping an eye on are the Tokyo Olympics and the health of the manufacturing sector in Great Britain.

Content Credit: Mark O’ Donnell