• GBP/JPY defends the previous day’s retreat from one-week high, retreats on upbeat Japan Q1 GDP.
• U-turn from monthly resistance line directs cross-currency pair towards 170.00 support confluence.
• Bears need validation from 200-SMA and BoE Governor Bailey.

GBP/JPY remains pressured around 170.25 while extending the previous day’s U-turn from a one-week high on early Wednesday. In doing so, the cross-currency pair justifies the upbeat Japan growth numbers while keeping Tuesday’s pullback from a descending resistance line stretched from May 01.

That said, Japan’s first quarter (Q1) 2023 Gross Domestic Product (GDP) rose to 0.4% QoQ versus 0.1% expected and 0.0% prior, per the preliminary reading.

Also read: Japan Q1 GDP improves to 0.4% QoQ versus 0.1% expected, 0.0% prior

Given the upbeat Japan data and the pair’s U-turn from the key resistance line, backed by a firmer RSI (14), the GBP/JPY is likely to decline further.

However, a convergence of the 50-SMA and a one-week-old ascending trend line, near 169.90 by the press time, could restrict the short-term downside of the GBP/JPY pair.

Following that, the double tops marked during late April around 168.00 and the current monthly can prod the pair sellers. It should be observed that the 200-SMA level of around 167.50 acts as the last defense of the GBP/JPY buyers.

Alternatively, recovery moves may aim for the aforementioned monthly resistance line surrounding 170.60 ahead of challenging a seven-week-old upward-sloping previous support line of near 170.90. Following that, GBP/JPY can target an upside move toward the monthly peak of 172.35.

GBP/JPY: Four-hour chart

Trend: Limited downside expected