GBP/JPY remains bullish at the end of another lukewarm week

• GBP/JPY is above the short-term technical resistance.
• Next week the United Kingdom will have a busy economic agenda.
• Japan's GDP growth will be published next Thursday.

On Friday, the pair GBP/JPY returned to familiar technical levels, near 188.50, after a bounce earlier in the week from the 186.20 area, as the British Pound (GBP) is hot on the heels of the Japanese Yen (JPY), which spent most of the week on the weak side.

The economic calendar has been tight for both currencies this week, leaving the sterling pair in a tough spot as investors face the prospect of interest rate cuts from both the Bank of England ( BoE) and the Bank of Japan (BoJ). Both central banks seem quite dovish for opposite reasons: the BoE, which faces an unbalanced British economy that sees inflation threats around every corner, and the BoJ, which fears excess deflation in the future, with the forecast that the Japanese inflation will fall below the Japanese central bank's 2% target in the coming months.

BOE's Bailey and Japan's GDP in store for next week

Haskel, the BoE's head of monetary policy, said early on Friday that while signs of progress on inflation in the UK have been encouraging, there is still plenty of room to clear on the BoE's agenda, and markets monetary policy have once again reduced bets on rate cuts by the British central bank. Markets now price in less than 75 basis points in BoE rate cuts in 2024.

Next week begins with the appearance of the governor of the BOE, Andrew Bailey, who will give a speech at the English University of Loughborough. UK jobs figures, as well as Consumer Price Index (CPI) inflation and UK GDP growth, will also be released mid-week, and next Friday the UK data week will conclude with Retail Sales .

Japan will release GDP growth figures early on Thursday, and markets expect growth in Japan to rebound in the fourth quarter to 0.3% quarter-on-quarter, compared to a decline of -0.7% in the previous quarter.

GBP/JPY Technical Outlook

GBP/JPY continues to chug along a short-term technical ceiling just south of the 189.00 area, finding space near 188.80 before retreating to the 188.50 area before Friday's close. The pair cleanly surpassed the 200-hour SMA near the 187.00 zone earlier in the week, and intraday momentum remains in the hands of bidders despite signs of congestion.

However, the 190.00 level remains a key but difficult level to overcome for GBP/JPY, with prices limited below the target zone and keeping the Guppy limited below the 190.00 level. The pair continues to trade in firmly bullish territory with the 200-day SMA near 182.11, well below the current price action. Guppy bids have not touched the long-term SMA since a decline to 179.00 in early 2024.

GBP/JPY hourly chart

GBP/JPY daily chart