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FX levels to watch: GBP/USD, USD/JPY

The pound is holding its own against the dollar but the resumption of the decline for USD/JPY is bad news for risk appetite.

GBP/USD edges higher for now

GBP/USD has rallied off the lows of the week, holding rising trendline support from the December low below $1.25.

However, trendline resistance from the 24 December high held back progress at $1.2674, so we need to see this broken to suggest an upward move is beginning. A more bearish view prevails with a break below trendline support and would then bring $1.2589, $1.2529 and $12476 into view.

USD/JPY sends worrying message

Normally, when equity markets rally, USD/JPY does so too, but the pair has been unable to sustain the bounce seen overnight, and is now heading back to the ¥110.20 lows of earlier in the week.

A break below these lows and on to ¥110.00 is very bearish, and would bring a host of targets into play, from ¥109.77, down to ¥108.74.

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