GBPJPY Forming Descending Channel

GBPJPY is currently trading within a well-defined descending channel on the 4H chart, showing signs of building pressure toward an upside breakout. The price has consistently respected both the upper and lower bounds of this channel, creating a controlled correction within a larger bullish trend. With the recent bounce off the lower channel boundary, the pair is now preparing for a potential bullish breakout, aiming for a target zone near 202.700 in the coming sessions.

From a fundamental perspective, the British pound is benefiting from hawkish commentary by the Bank of England, which continues to battle sticky inflation. The latest UK inflation data suggests that price pressures remain elevated, prompting market participants to anticipate further tightening or a prolonged hold in interest rates. On the other hand, the Japanese yen continues to weaken due to the Bank of Japan’s ultra-loose monetary policy, making GBPJPY attractive for long positions amid widening yield differentials.

Technically, the structure remains bullish in the broader context, and this descending channel looks more like a bullish flag—a continuation pattern. If bulls maintain momentum and break above the upper trendline near 199.50, we can expect a strong impulsive move toward the 202–203 zone. The risk remains well-defined below 197.40, which is the recent swing low, giving a healthy risk-to-reward setup for traders.

With strong technical structure and fundamental divergence favoring the British pound over the yen, GBPJPY presents a high-probability long opportunity. I'm looking for confirmation of a breakout on lower timeframes, and once triggered, I expect clean bullish follow-through. Stay ready for the breakout—it’s a textbook setup aligning with macro and technical confluence.