GBPJPY Technical Analysis – Key support in sight | Forexlive

UK:

• The BoE hiked by 25 bps as expected at the last
  meeting.
• The central bank seems to be leaning
  more on the less hawkish side as a key line in the statement was tweaked to
  indicate the propensity for a “higher for longer” stance rather than keeping
  with additional rate hikes.
• Recent key economic data like the
  latest employment report showed even more wage growth
  despite the unemployment rate ticking higher again, and the UK CPI beat expectations pointing to stagflation.
• The UK PMIs missed expectations across the board with the
  Services sector plunging into contraction.
• The market expects the BoE to hike
  by 25 bps at the upcoming meeting.

Japan:

• The BoJ kept everything unchanged as expected at the last meeting but
  implicitly tweaked the YCC policy keeping the target band unchanged but giving
  more flexibility with a hard cap at 1.00%.
• The Japanese CPI data surprised to the upside
  recently with the core-core reading reaching again the previous high.
• The Unemployment Rate surprisingly jumped to 2.7%
  although it remains near the lows.
• BoJ’s Governor Ueda at the Jackson Hole Symposium
  reaffirmed that inflation is still below target and that’s why they’re sticking
  with their monetary easing. This was also echoed by other BoJ members, but they
  are starting to see the light at the end of the tunnel.

GBPJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see that GBPJPY is
consolidating on the key 184.00 support as the
market is caught between the recessionary fears and the uncertainty on the UK
rates. We can also see that the last push to the upside diverged with the
MACD, and
this is generally a sign of weakening momentum often followed by pullbacks or
reversals. The level to watch for the sellers will be the 184.00 support and
the trendline as a
break below them should give way to a selloff into the 176.32 level.

GBPJPY Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that from a risk
management perspective, the buyers will be better off to wait for the price to
come into the trendline and the 38.2% Fibonacci retracement level as
they will have a much better risk to reward setup and can fold quickly if the
price continues lower invalidating the bullish case. For now, it’s all about
waiting as the price remains stuck in a range.

GBPJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the range between the 184.00 support and the 186.00 resistance. If the
price breaks to the upside, we should see more buyers piling in to extend the
rally into a new high. Vice versa, if the price breaks lower, the sellers will
pile in to target the trendline first and eventually a break below it.

Upcoming Events

This week is a bit empty on the data front with just the
US ISM Services PMI today and the US Jobless Claims tomorrow being the main
highlights. If we see strong data, the market is unlikely to price an imminent
recession and GBPJPY is likely to remain rangebound. On the other hand, weak
data should bring back recessionary fears and depress global yields and
ultimately favouring the JPY. We conclude the week with the Japanese wage data
on Friday which is a key metric for the BoJ and its policy discussions. The
last time, the data missed expectations and weakened the yen.