GBP/JPY Price Forecast: Pound returns above 202.00 on risk-on markets

• The Pound trims some losses against the Japanese Yen and returns to the 202.25 area.
• A brighter market mood and political uncertainty in Japan are providing some support to the Sterliong.
• GBP/JPY maintains its bearish trend intact while below 203.50.

The British Pound is posting moderate gains on Wednesday, as a mild appetite for risk and ongoing political uncertainty in Japan weigh on the Japanese Yen. The Pair has returned beyond the 202.00 level, after bouncing from 201.35 lows on Tuesday.

The risk mood improved on Wednesday, as market expectations of upcoming interest rate cuts by the Federal Reserve were influenced by concerns about escalating trade tensions between Washington and Beijing, at least for now.

In Japan, the Yen found some footing amid the dwindling chances that the pro-stimulus Sanae Takaichi becomes Prime Minister. Still, the ongoing political uncertainty is keeping a lid on JPY recovery.

Technical analysis: The broader bias remains bearish below 203.50

The technical picture shows easing bearish pressure, yet with the upside momentum frail. The 4-hour Relative Strength Index is still below the 50 level, and price action remains trapped within an expanding bearish wedge from last week's highs.

Bulls are testing Tuesday's high, at 202.35, on their way to the wedge top, now at the 202.80 area, where they are likely to meet significant resistance. Beyond here, the October 13 high, at 203.50, is the key level to confirm that the correction from October 8 lows has been completed.

To the downside, immediate support is at the 201.25 area, where the 50% Fibonacci retracement of the early October rally meets October 6 and October 14 lows. Further down, the 200.40 level (September 26 highs and October 6 low) emerges as the next target ahead of Monday's gap opening level, at 198.85.