• The Pound rallies to fresh two-week highs past 203.30, favoured by generalized JPY weakness.
• News of a loser fiscal budget in Japan has sent the Yen lower across the board on Wednesday.
• Technically, the GBP/JPY remains on a bullish trend, with 204.25 on the bull's focus.

The Pound has shrugged off the negative pressure from the weak UK employment data seen on Tuesday and bounced up from levels below 202.5, to break the 203.30 resistance area, hitting session highs above 203.50 for the first time since late October.

The Sterling is drawing support from broad-based Yen weakness, following Japanese Prime Minister Sanae Takaichi's announcement that she is working on a fiscal consolidation target, which would allow for higher government spending. Before that, the Prime Minister urged the BoJ to keep interest rates at low levels, casting further doubts on a December interest rate hike.

GBP/JPY's technical indicators are mixed

The technical picture is mixed. The Relative Strength Index (RSI) in 4-hour charts is at high levels but still below overbought territory, and fundamentals are supportive. The Moving Average Convergence Divergence, however, is showing an impending cross below the signal line, suggesting that the trend might have run out of steam.

If price action consolidates at these levels, it could give bulls confidence to attempt a retest of the October 27 high at 204.25. Beyond that, the next target would be the October 8 high, at 205.33.

To the downside, a reversal below the mentioned 203.30 level might find support at Tuesday’s low of 202.35. Further down, the November 10 low, near 201.80, might test bearish momentum before the November 6 and 7 lows in the area between 200.30 and 200.60.

(This story was corrected on November 12 at 09:30 GMT to say that the Pound rallies to fresh two-week highs past 203.30, and not two-week lows, as previously reported.)