GBPJPY Tests 200 DMA

If that level (the green line) is broken to the upside, we could see another leg higher, targeting the 50-day moving average (the purple line) near 155.25.

Alternatively, if traders sell the current rally, the decline could be bought near the support zone at 152.50. The short-term outlook will likely depend on the developments coming from Ukraine.

The USDJPY pair has already broken to the upside from its multi-month triangle pattern, soaring to the highest level since 2017. Therefore, we might see further buying pressure in the JPY crosses.

The outlook seems neutral from the long-term perspective as the cross has been stuck in a narrow range between 158 and 149 (as shown on the chart with blue horizontal lines). 

Earlier in the day, the Office for National Statistics showed the UK economy bounced back strongly in January after taking a hit from the Omicron variant and Plan B restrictions. GDP grew 0.8% after contracting by 0.2% in December, coming in comfortably ahead of expectations of 0.1% growth. This leaves GDP 0.8% above pre-pandemic February 2020 levels. 

In the initial reaction, sterling failed to rally after the data, but sentiment improved ahead of the US session, strengthening the Pound.