GBP/JPY Price Outlook: Sterling holds firm near multi-year peaks above 212.20

Sterling Maintains Strength Amid Political Developments in Japan

On Monday, the British Pound remained elevated above 212.10, buoyed by a weakening Japanese Yen. This shift followed reports that Prime Minister Sanae Takaichi may be contemplating early elections as soon as February.

Kyodo News revealed that Takaichi has reportedly informed a senior member of the Liberal Democratic Party (LDP) about the possibility of dissolving the House of Representatives on January 23, with snap elections potentially scheduled for either February 8 or 15.

This unexpected announcement unsettled financial markets, sparking renewed concerns over political instability in Japan and causing the Yen to depreciate broadly.

Technical Outlook: GBP/JPY Eyes Further Gains

Currently, GBP/JPY is trading at 212.29, continuing its upward movement within a rising channel established since early November. Technical signals remain positive: the 4-hour Relative Strength Index (RSI) stands at 66, indicating strong bullish momentum without entering overbought territory. Additionally, the Moving Average Convergence Divergence (MACD) line is positioned above the Signal line, with the histogram expanding in positive territory—both signs of increasing upward strength.

• If the pair secures a position above the previous high of 212.10, buyers are likely to target the 127.2% Fibonacci extension at 212.85.
• The next significant resistance is at the 161.8% extension, located at 213.34.

Should the price fall below 210, attention will shift to the trendline resistance, now at 211.20. Further declines could see support tested near the late December lows, between 210.05 and 210.25.

(This technical analysis incorporates insights generated with the assistance of AI tools.)