GBPJPY Technical Analysis | Forexlive

GBP

• The BoE kept interest rates
  unchanged as expected at the last meeting.
• The central bank is leaning towards
  keeping interest rates “higher for longer”, although it keeps a door open for
  further tightening if inflationary pressures were to be more persistent.
• BoE Governor Bailey repeated that
  they will keep rates high for long enough to get inflation back to target.
• The latest employment report beat
  expectations with wage growth remaining at elevated levels.
• The UK CPI missed expectations
  across the board, which is a welcome development for the BoE.
• The UK PMIs showed further
  contraction in the services sector, which accounts for 80% of UK’s economic
  activity.
• The UK Retail Sales missed
  expectations across the board by a big margin as consumer spending remains
  weak.
• The market doesn’t expect the BoE to
  hike anymore.

JPY

• The BoJ kept its monetary policy basically
  unchanged at the last meeting but formally widened the YCC to 1% on the 10-year
  JGBs stating that it will be a reference cap.
• Governor Ueda repeated once again
  that they won’t hesitate to take easing measures if needed and that they are
  not foreseeing sustainable price increases.
• The Japanese CPIshowed that inflationary pressures remain high with
  the core-core reading hovering at the cycle highs.
• The Unemployment Rate remained
  unchanged near cycle lows.
• The Japanese Manufacturing PMI
  matched the prior reading remaining in contraction with the Services PMI
  falling but holding on in expansion.
• The latest Japanese wage data beat
  expectations. As a reminder the BoJ is focusing on wage growth to decide
  whether to tweak its monetary policy.
• The market expects the BoJ to keep
  interest rates unchanged at the next meeting as well.

GBPJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see that GBPJPY probed
above the cycle high at 186.74 but rolled over soon after as disappointing US
data led to a fall in global yields with the markets now pricing in rate cuts.
We can see that the price recently bounced on the red 21 moving average and
it’s now back around the 186.74 level. From a risk management perspective, the
buyers will have a much better risk to reward setup around the major trendline,
but a break above the 186.74 level could be enough to trigger another bullish
wave.

GBPJPY Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see more closely the
current price action with the price at the key 186.74 level where we can also
find the confluence with the 61.8% Fibonacci retracement level of the recent
fall. This is where the sellers are likely to pile in with a defined risk above
the level to target a drop into the major trendline around the 184.00 level.
The buyers, on the other hand, will want to see the price breaking above the
186.74 level with conviction to invalidate the bearish setup and increase the
bullish bets into new highs.

GBPJPY
Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the
price recently diverged with the MACD which is generally a sign of weakening
momentum often followed by pullbacks or reversals. The start of the divergence
is usually the target for a correction, so in this case it all falls perfectly
into the 186.74 level. The buyers are likely to lean on the minor upward
trendline to position for a continuation of the rally above the resistance. The
sellers, on the other hand, will want to see the price breaking lower to
increase the bearish bets into the 184.00 level.

Upcoming Events

Today we will get the latest
US Jobless Claims report which is probably going to be the most important
release of the week. Tomorrow, the US will be on holiday for Thanksgiving Day
and therefore the liquidity in the market will be thinner. On Friday, we
conclude the week with the Japanese CPI data and the US PMIs. Weak US data
should support the JPY as global yields are likely to fall further, while
strong data is likely to weigh on the Yen in the short term.