GBP/JPY Price Forecast: Drifts lower as ‘bearish flag’ emerges

GBP/JPY slips within 208.00–209.25 range as sellers defend near-term resistance.
Bearish flag pattern and weak RSI signal rising downside risks toward 207.50.
Break below channel support exposes 205.32 and 200-day SMA near 202.60.

GBP/JPY retreats on Monday, down 0.22% yet it remains consolidated within the 208.00-209.25 range, with traders eyeing a key break of support level seen at around 207.75. At the time of writing, the cross trades at 208.57 after reaching a high of 209.23.

GBP/JPY Price Forecast: Technical outlook

The technical picture shows consolidation near the bottom of an ascending uptrend channel. Although the convergence of the support trendline and the 100-day Simple Moving Average (SMA) at around 207.60 has kept the GBP/JPY from falling, downside risks are emerging amid the formation of a ‘bearish flag.’

Momentum shows that GBP/JPY shorts have the upper hand as the Relative Strength Index (RSI) remains depressed below its neutral level, aiming downwards. That said, further downside is seen.

If GBP/JPY tumbles below 208.00, the next support would be key support around 207.50. On further weakness, the next stop would be the October 8 swing high turned support at 205.32, ahead of the 200-day Simple Moving Average (SMA) at 202.60.

Upwards, GBP/JPY buyers need to push prices past the 209.50 area, followed by 210.00. If they clear stir resistance at the confluence of the 20- and 50-day SMAs around 210.73/210.98, the GBP/JPY could be poised to test the February 10 high at 213.82.