GBP/JPY Price Forecast: Further decline towards 197.00 looks likely

• The Pound extends losses against a firmer Yen and tests support at 198.25
• The risk-averse market following Trump's new tariff threats is weighing on the pair.
• Below 198.25, the pair might extend losses to the 196.80 area.

The Pound is correcting lower from last week's highs, right below the 200.00 psychological level, with bears testing support at the area around previous highs, in the 198.30- 198.40 region at the time of writing.

Market sentiment is sour, as Trump's latest tariff threats to the Eurozone and Mexico have added uncertainty to the global trade outlook. The market reaction has been moderate, but a mild risk aversion keeps putting pressure on the Sterling, supporting the safe-haven Yen.

Technical Analysis: In a bearish correction within a broader bullish trend

The GBP/JPY's immediate trend is mildly negative, with price action coming down from 299.85 highs on July 9, and the lower high at 199.45 giving fresh hopes for bears. The RSI has crossed into negative territory below 50, with bears eroding the 198.25 support area.

The broader trend remains bullish, with the pair trading within an ascending channel from early May lows, but, in the current context, a further correction should not be discarded.

A confirmation below Friday's low, at 198.25, would find support at the July 7 low, which crosses the bottom of the ascending channel, at the 196.80 area. On the upside, the highs of 199.45 and 199.85 on July 11 and 10, respectively, close the path towards the channel´s top, now at 200.40.