Technical Bias: Slightly Bearish
Key Takeaways
• British pound remains at risk of further losses against the Japanese yen in the near term.
• GBPJPY pair breaks an important support zone to trade lower.
• GBPJPY support seen at 171.00 and resistance ahead at 171.60.
The British pound is trading lower against the Japanese yen after the break of an important channel support. However, the pair might find buyers around a crucial confluence support area at 171.00.
Technical Analysis
There was an ascending channel formed on the hourly timeframe for the GBPJPY pair. Recently, the pair has managed to break the channel support area, which cleared its way for a move lower. The channel support area also coincided with the confluence zone of 100 and 50 hourly simple moving averages. So, this particular break can be seen as crucial. The pair might head towards the next possible support area at 171.00, which represents the 38.2% Fibonacci retracement level of the last leg higher from the 169.79 low to 171.84 high. The mentioned support area holds a lot of significance, as the 200 hourly SMA also lies around the same levels. So, it is possible that the pair might find buyers around the 171.00 levels. A break and close below the confluence support zone could take the pair lower towards the 50% fib level.
On the upside, if the buyers manage to take the pair higher again, the broken 100 and 50 hourly SMA can be seen as an immediate resistance at 171.60, followed by the previous high at 171.97.
CBI Distributive Trades Survey
Today during the London session, the CBI Distributive Trades Survey will be released by the Confederation of British Industry. The forecast is slated for a rise from 30.0 to 35.0. If the does not disappoint, then the British pound might gain some traction intraday.
Overall, the pair might trade lower in the coming sessions, but we need to be very careful as it approaches a critical support zone.
