GBP/JPY Price Forecast: Pound attempts to regain 212.00 on Yen weakness

GBP/JPY nears the 212.00 level after bouncing from session lows below 211.00.
The Yen tumbled across the board as Japan’s Prime Minister Takaichi called for a snap election.
The Pound remains capped from a reverse trendline at the 212.00 area.

The Pound is attempting to return above the 212.00 level after bouncing from lows near 211.00 earlier on the day. News that Japanese Prime Minister Sanae Takaichi has called for a snap election on February 8 has sent the Yen tumbling across the board.

Markets are fearing that Takaichi’s increasing popularity will render her a larger parliamentary support to deepen into her policy of large-stimulus measures and accommodative monetary policy, which, considering Japan’s balooning public debt, might lead the country into a fiscal crisis.

Technical analysis: Pound broke below the ascending trendline

The GBP/JPY trades at 211.81 at the time of writing. Price action has broken trendline support from eally November lows, which is holding bulls now at the 212.00 area, a negative sign.

Technical indicators remain neutral-to-bearish. The Moving Average Convergence Divergence (MACD) line remains below the Signal line and below zero, while the Relative Strength Index (RSI) sits near 44, neutral below the 50 midline.

Failure to breach the mentioned 212.00 area would add pressure towards the late December and early January lows in the area of 210.30, ahead of the December 10 high, at 208.90. If 212.00 gives way, the path would be clear for a retest of the January 15 high, at 212.80, and the long-term high, near 214.30.