There are short-term risks to sterling as a daily bear trend tries to extend versus the yen but there is also longer-term potential for GBP/JPY to re-visit its highs from 2015.
A leading U.S. bank favours holding a December long play from 185.90 for 192.00 with a 183.50 stop.
A profitable trade would point GBP/JPY towards the June 2015 highs around 195.86.
Much depends on continuing policy divergence between the Bank of England and Bank of Japan.
UK inflationary pressures are likely to keep the BoE on a hawkish standing, which should help underpin the cross.
However, the U.S. Federal Reserve's policy outlook remains uncertain and any hawkish rhetoric could unsettle risk sentiment and send investor flows back to the yen.
Technically, there are signs that GBP/JPY could reverse its recent 188.65-185.04 drop.
Long lower candle shadows on the daily chart suggest sterling supply might be fading.
Weekly price action is holding above the 10-week moving average, today at 184.53.
The monthly up-trend, in place since March 2020, is holding and is drawing support from the 10-month moving average at 179.80.
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