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GBP/JPY Eyes Bullish Rebound from Key 50% Fibonacci Level

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The GBP/JPY currency pair has attracted buyers around the 50% Fibonacci retracement level, close to the 189.00 mark. This key technical level offers a potential launching point for a bullish impulse that could see the pair retesting the 198.00 area, which aligns with a prominent supply zone. Traders are eyeing this level for a possible breakout as market conditions increasingly favor the British Pound (GBP) over the Japanese Yen (JPY).

The Japanese Yen has been under pressure following comments from Japan's incoming Prime Minister, Shigeru Ishiba, who emphasized that the Bank of Japan’s (BoJ) monetary policy must remain accommodative to support the country’s fragile economic recovery. Ishiba’s stance highlights the ongoing need for stimulus in Japan, which contrasts sharply with the more hawkish outlook from other central banks globally. This dovish tone from Japan’s leadership has further weakened the Yen, making it more attractive for buyers of GBP/JPY.

In addition to the incoming PM’s remarks, political developments in Japan also play a role in the JPY’s softness. Ishiba has announced plans for a general election scheduled for October 27, creating a sense of political uncertainty that could continue to weigh on the Yen in the near term. Coupled with mixed Japanese economic data, these factors contribute to the ongoing depreciation of the Yen, allowing the British Pound to gain further traction.

From a technical standpoint, the GBP/JPY pair’s rebound from the 50% Fibonacci retracement level around 189.00 signals potential bullish momentum, supported by weakening fundamentals in Japan. If the bullish sentiment continues, the pair could target the 198.00 supply zone in the coming sessions. However, traders should remain cautious, as any shifts in Japan's economic or political landscape could introduce volatility into the pair.

In conclusion, GBP/JPY appears poised for a potential bullish run, driven by technical support and favorable fundamental developments. The weakening Japanese Yen, alongside continued political uncertainty, offers a supportive backdrop for the Pound’s strength, setting the stage for a possible retest of the 198.00 supply zone. Traders should monitor key developments in Japan as well as global market sentiment for further cues.

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