GBP/JPY posts third straight day of losses, rounding the corner into 185.00

The GBP/JPY has closed in the red for six of the last seven consecutive trading days.
Broad-market risk-off market sentiment is seeing a firm bid into safe havens like the Yen.
Wednesday brings the BoE’s latest Financial Stability Report, early Friday sees Japan quarterly GDP.

The GBP/JPY slid for the third straight trading day on Tuesday, closing down for six out of the seven consecutive days. The Guppy is grinding down towards the 185.00 handle as the Pound Sterling (GBP) waffles against the Japanese Yen (JPY).

Early Tuesday saw the UK’s BRC Like-For-Like Retail Sales for the year into November beat expectations, printing at 2.6% versus the forecast steady reading at 2.5%.

Broader market sentiment saw little pick-up on the UK mid-tier data beat, with investors backing into safe havens as risk appetite sours heading into the midweek following a Moody’s credit downgrade of China.

With China set to begin bailing out struggling local governments and state-owned companies behind the bamboo curtain, Moody’s sees weak points in the Chinese government’s funding flows moving forward. The open view into a steepening slowdown in Asia markets has hobbled risk appetite across broader markets.

Wednesday will pose new challenges for risk sentiment with the Bank of England (BoE) set to deliver its latest Financial Stability Report, where investors will get a closer look at the BoE’s hawkish or dovish stance on the UK’s economic outlook, while early Friday sees Japan’s latest Gross Domestic Product (GDP).

Japan’s QoQ GDP growth is expected to hold steady at a contractionary -0.5%.

GBP/JPY Technical Outlook

With the GBP/JPY grinding towards the 185.00 handle heading into Wednesday’s trading session, the Pound Sterling is down four-tenths of a percent against the Yen, and the GBP/JPY is down nearly 2% from November’s multi-year highs at 188.66.

Long-term technical support for the GBP/JPY is coming from a rising 200-day Simple Moving Average (SMA) lifting into the 178.00 handle, though the pair is set for a continued slide into the 50-day SMA near 184.00, a confluence technical support level with the last swing low.