Technical Bias: Bearish
Key Takeaways
• British pound looks like correcting higher against the Japanese yen in the near term.
• GBPJPY pair faces a cluster of resistances on the way up.
• GBPJPY support seen at 172.80 and resistance ahead at 173.80.
The Japanese yen traded higher against the British pound during this past week, but seems correcting in the short term. However, the chances of the yen gaining traction again after some retracement is very high.
Technical Analysis
There is a monster trend line formed on the 4 hour timeframe for the GBPJPY pair. The pair after testing the 172.60 support level managed to trade higher again. Currently, the pair is trading around a significant resistance confluence area of 200 simple moving average (SMA) – 4H and 23.6% Fibonacci retracement level of the last drop from the 175.36 high to 172.66 low. The 4 hour RSI is testing the 50 level, so if the pair breaks higher and RSI also breaches the 50 mark, then it would open the doors for further upside acceleration. However, there is a major barrier around the 173.70-80 area, as the highlighted trend line, 38.2% fib level and 50 SMA (4H) reside around the mentioned resistance zone. It is around this area where the British pound sellers are likely to appear, and take it lower against the Japanese yen.
There is also a possibility that the pair might fail around the 173.40 resistance area, and moves lower again. In that situation, initial support can be seen around the last low of 172.66. If the mentioned support level fails to hold the downside in the GBPJPY pair, then a test of the 172.00 level would be on the cards.
CBI Industrial Trend Orders
Later during the London session, the Confederation of British Industry (CBI) Industrial Trends Orders data will be published, which is expected to register a decline from 11 to 8. If the outcome exceeds the expectation, then the British pound might break the 173.30-40 resistance to test the 173.80 level in the short term.
