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Sterling Shows Resilience, but Economic Fundamentals Remain a Concern
Economic
Summary:
After approaching the key psychological level of 200.00 on Wednesday, bullish momentum in GBPJPY eased as expected. Although the pair rebounded on Thursday, it failed to fully shake off the technical pressure from the head-and-shoulders top pattern, indicating that downside risks persist in the near term.
Sell
TradingGBPJPY
EXP
198.574
Entry Price
196.450
TP
199.500
SL
198.848 +0.560 +0.28%
0
Point
Flat
196.450
TP
CLOSING
198.574
Entry Price
199.500
SL
Fundamentals
Despite facing multiple economic challenges, the British pound has demonstrated resilience in recent sessions. During Wednesday's parliamentary questioning, Prime Minister Keir Starmer did not rule out the possibility of introducing a future wealth tax. However, unlike last week, this statement did not trigger market panic or a sharp sell-off in sterling.
Previously, the Prime Minister's inconsistent stance on welfare reform and delayed confirmation of Chancellor Rachel Reeves' position had raised concerns over policy uncertainty, putting downward pressure on the pound. While the political turmoil has somewhat subsided, reports indicate that the UK still faces severe fiscal and growth challenges, limiting the upside potential for sterling.
Technical Analysis
During Thursday's Asian session, GBPJPY found some support in the 198.35–198.40 range, attracting dip-buying interest and curbing the modest pullback from the previous day's high. The spot price remains below the 199.00 level and continues to trade within a head-and-shoulders top pattern on the hourly chart, suggesting that short-term downward pressure remains.
From a medium-term perspective, the upward trend over the past two months has followed a steady ascending channel, indicating that the broader bullish structure is still intact. On the daily chart, oscillators remain in positive territory and have not yet entered overbought conditions, further supporting the possibility of continued bullish momentum.
If GBPJPY can decisively break above the current consolidation zone and the upper boundary of the channel — the psychological 200.00 level — it would signal the start of a new upward wave and open the door for a retest of the yearly high.
Conversely, a break below the key support zone of 198.35–198.40 could trigger additional technical selling, potentially pushing the pair lower toward the next major support area at 197.15–197.10.
Overall, the medium-term trend remains bullish, supported by the channel structure. However, short-term technical pressure persists due to the unresolved head-and-shoulders pattern. A successful break above 200.00 would confirm the resumption of the bullish trend, while a drop below 198.35 would raise the risk of a deeper short-term correction.
Trading Recommendations
Trading Direction: Sell
Entry Price: 199.00
Target Price: 196.45
Stop Loss: 199.50
Deadline: July 25, 2025, 23:55:00
Support: 198.38/198.11/197.17
Resistance: 199.24/199.48/199.83
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