GBP/JPY teases a bull flag breakout despite UK political uncertainty

• GBP/JPY is looking to extend the bullish momentum towards 158.00.
• UK PM Johnson is bearing brunt of violating his government's covid rules.
• Bull flag confirmation on the 1D chart will open doors towards 165.00.

GBP/JPY is advancing towards 158.00, trading close to three-month highs amid a broad meltdown in the US dollar, which overshadowed the brewing UK political turmoil.

At the momentum, the greenback is licking its wound after being smashed on ‘sell the fact’ flows on in-line with expectations US inflation data. The US CPI arrived at 7.0% YoY in December, matching the market consensus.

Mounting political pressures surrounding the 40-year high inflation in America could also be attributed to the dollar’s downfall. This has fuelled the correction in USD/JPY, as it now trades close to 114.50 vs. 115.50 levels seen a day before.

On the GBP-side of the story, the cable is so far resilient to the brewing political turmoil in the UK, especially in light of PM Boris Johnson flouting his government's covid rules, in a garden party during the country’s first lockdown in 2022.

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