GBP/JPY Price Analysis: Rallies after hitting the double-top target, below 159.50

• The GBP/JPY rallied after hitting a three-month fresh low at 159.44.
• A risk-off impulse exacerbated GBP/JPY fall towards the double-top target.
• The GBP/JPY is neutral biased, but a break above 162.00 puts the 163.00 targets in place; otherwise, a drop to 161.00 is on the cards.

The GBP/JPY rallied after touching the double-top target and the daily low at around 159.44, then hitting a daily high at 162.00 before retracing to current price levels. At the time of writing, the GBP/JPY is trading at 161.99 as the Asian session begins.

Investor’s sentiment shifted sour as tensions arose between China and the US. The visit of US House Rep. Nancy Pelosi was promptly condemned by China, saying it “has a severe impact on the political foundation of China-US relations, and seriously infringes upon China’s sovereignty and territorial integrity.”  Besides that, traders reconsidered the so-called Fed “dovish” pivot, with policymakers like Daly, Evans, and Mester reiterating Fed’s commitment to tackle inflation.

Also read: GBP/JPY Price Analysis: Double-top about to reach its target

GBP/JPY Price Analysis: Technical outlook

The GBP/JPY daily chart illustrates the pair as neutral biased once the double-top target was achieved when the pair hit 159.50. After that, the cross-currency rallied sharply, 250 pips, towards the daily highs, but short of August 1, open at 162.27, forming a hammer with bullish implications.

Therefore, the GBP/JPY first resistance would be 162.00. Break above will expose the August 1 high at 162.49, followed by the 100-day EMA at 162.73, and then the 163.00 mark.

GBP/JPY Key Technical Levels