GBP/JPY is posting moderate gains on Monday, recovering part of Friday’s decline and climbing back into the upper 203.00s. Despite the rebound, long upper wicks on the daily chart highlight clear hesitation as the pair approaches a significant resistance band between 204.05 and 204.25.
The Pound is showing resilience in otherwise choppy market conditions, but lingering concerns over the UK’s fiscal outlook continue to cap upside potential. Reports that Chancellor Rachel Reeves will pull back from plans to raise income tax in the November 26 budget have intensified doubts about the government’s ability to meet its fiscal targets, adding a layer of caution to GBP sentiment.
Technical analysis: key barrier at 204.25 limits bullish attempts
The technical backdrop remains constructive overall. The 4-hour Relative Strength Index (RSI) is comfortably above 50, signalling persistent bullish bias. However, the Moving Average Convergence Divergence (MACD) is flattening, suggesting a lack of strong momentum as price action approaches a critical resistance zone around 204.25—the October 27 high.
Bulls may struggle to force a clean break above this barrier. Additional resistance lies at the 261.8% Fibonacci extension of the November 5–6 rally at 205.00, followed by the year-to-date high at 205.30, recorded on October 8.
On the downside, immediate support stands at the intraday low near 203.15. A break below this area would expose the October 11 and 14 troughs near 202.35. If bears push beyond these levels, the next target is the November 10 low at 201.85, ahead of the November 6–7 support band between 200.30 and 200.60.
With the Pound facing fundamental headwinds and the Yen retaining safe-haven interest, GBP/JPY may remain range-bound until a decisive catalyst triggers a breakout on either side.
