GBP/JPY Price Forecast: Sees more upside above 200.00

• GBP/JPY demonstrates strength around 200.00 as the Pound Sterling performs strongly.
• Investors await key preliminary UK Q2 GDP data.
• BoJ officials warn of global trade risk despite US-Japan trade agreement confirmation.

The GBP/JPY pair trades firmly near the psychological level of 200.00 during the European trading session on Wednesday. The pair revisited the 200.00 level on Tuesday as the Pound Sterling (GBP) strengthened after the release of the United Kingdom (UK) labor market data for three-months ending June.

The report showed that the Unemployment Rate remains steady at 4.7%, as expected. Also, Average Earnings Excluding Bonuses grew 5%, in line with estimates and the prior release.

Going forward, investors will focus on the preliminary Q2 Gross Domestic Product (GDP) and factory data for June, which will be published on Thursday. Economists expect the UK economy to have barely grown in the last quarter of the year. The GDP growth rate is seen at 0.1%, against a 0.7% increase in the first quarter.

Meanwhile, the Japanese Yen (JPY) underperforms broadly as investors doubt the Bank of Japan (BoJ) to raise interest rates again this year. The BoJ Summary of Opinions showed that officials are concerned about the economic outlook due to tariffs imposed by the United States (US) economy, even as Tokyo and Washington have reached a trade agreement.

GBP/JPY extends its over-a-week long recovery move from 195.00 to near 200.00. The near-term trend of the cross is bullish as it holds above the 20-day Exponential Moving Average (EMA), which trades around 198.18.

The 14-day Relative Strength Index (RSI) rises to near 60.00. A fresh bullish momentum would emerge if the RSI breaks above that level.

The pair could extend its upside towards 23 July 2024 high of 203.16  and 205.00 if it breaks above the psychological level of 200.00.

On the flip side, a downside move by the pair below the May 6 low of 190.33 will expose it to the March 11 low of 188.80, followed by the February 7 low of 187.00.

GBP/JPY daily chart