• GBP/JPY eases to 217.60 after hitting a new record high at 218.01 earlier on Thursday
• The wide gap between the interest rates of the BoJ and the rest of the major central banks is crushing the JPY.
• A bearish divergence on RSI charts hints at a potential correction.

The British Pound (GBP) is pulling lower against the Japanese Yen (JPY) on Thursday, after hitting a fresh all-time high at 218.01 earlier on the day. The pair has returned to the mid-range of the 217.00s at the time of writing, yet with the bullish trend in place, holding comfortably above the previous highs, in the 217.20 area.

Risks of an intervention by the Japanese authorities remain high, but the wide divergence between the Bank of Japan’s (BoJ) interest rates and those of the major central banks poses a heavy weight on the JPY. More so with Oil prices bouncing up and pressuring global central banks to tighten their borrowing costs.

Technical Analysis: RSI divergence hints at a potential correction

GBP/JPY trades at 217.60, with Elliott Wave analysis suggesting that the pair might be on the fifth and last wave of a bullish cycle. The Pound has pulled back from the 127.2% Fibonacci extension of the fourth wave, at 218.00, and the bearish divergence in the four-hour Relative Strength Index suggests that some consolidation or a corrective reversal might follow from here.

Bears, however, should break the July 7 lows, at 216.35, to confirm that the bullish cycle has completed. In that case, the early July trading floor, near 214.65, would emerge as the next target.

The broader bias, on the other hand, remains positive, and bulls might attempt a further rally, heading for the 261.8% Fibonacci extension of the mentioned rally, at 218.90. Furter appreciation seems off the cards right now.

(The technical analysis of this story was written with the help of an AI tool. Know more.)