• GBP/JPY extends the previous day’s rebound from a fortnight low on upbeat UK inflation data.
• Convergence of 21-DMA, 100-DMA challenges buyers at the weekly top.
• Clear break of three-week-old resistance line, impending bull cross on MACD also suggests further upside.

GBP/JPY takes the bids to refresh the weekly top near 163.00 as bulls cheer strong UK inflation data during early Wednesday morning in Europe. In doing so, the cross-currency pair pokes the 21-DMA and 100-DMA confluence while extending the previous day’s upside break of the three-week-old resistance line, now support around 162.20.

UK Consumer Price Index (CPI) rose to 10.1% YoY versus 9.8% expected and 9.4% previous readings while the Core CPI, which excludes volatile food and energy items, rose to 6.2% versus 5.9% market consensus and 5.8% previous readouts.

It’s worth noting that the quote’s rebound from the 61.8% Fibonacci retracement of the May-June upside, as well as a looming bull cross of the MACD line, also signal the GBP/JPY pair’s further upside.

Hence, buyers are all set to cross the 163.10 hurdle, which in turn could propel the prices towards July’s peak of around 166.35. However, the 38.2% Fibonacci retracement level near 163.75 could act as an extra filter to the north.

Meanwhile, pullback remains elusive until the quote stays beyond the previous resistance line, now support near 162.20.

Even so, a daily closing beneath the 61.8% Fibonacci retracement level of 160.60 appears necessary for the GBP/JPY bears to keep reins.

GBP/JPY: Daily chart

Trend: Further upside expected