GBP/JPY Buyers Aim for 100-Day Moving Average Amid Market Volatility
Market Overview
On Monday, the GBP/JPY pair is influenced by a blend of economic factors from both the UK and Japan. Recent economic data from the UK, including inflation and employment figures, indicate a robust economic recovery, providing support for the British pound. However, there are lingering concerns about the future direction of the Bank of England’s monetary policy, especially amid potential global economic slowdown.
In Japan, the yen continues to benefit from its status as a safe-haven currency, which can strengthen during periods of global uncertainty. Additionally, the Bank of Japan’s ongoing accommodative monetary policy, which contrasts sharply with the tightening stance of other central banks, adds further pressure on the yen. Consequently, the outlook for the GBP/JPY pair remains mixed, with potential volatility driven by upcoming economic data releases and central bank communications from both countries.
Technical Analysis
In the daily chart, the GBP/JPY pair has shown signs of halting its recent downtrend by forming a higher low at 188.232. This suggests a potential pause in the bearish momentum. On Monday, the pair has broken above the neutral range ceiling at 192.004, signaling a bullish bias as buyers aim to push the price towards the 100-day moving average near 194.335. If the upward momentum continues, the next target for buyers will be 198.107.
Oscillator Confirmation
RSI (Relative Strength Index): The RSI is neutral, indicating a balance between buying and selling pressures.
MACD (Moving Average Convergence Divergence): The MACD is mixed, suggesting potential for both upward and downward movements.
Moving Averages: The moving averages are also mixed, reflecting the current indecisive nature of the market.
Alternative Scenario
Should buyers retreat, the focus will shift to the support levels at 190.563 and 188.232. A break below the latter would invalidate the bullish scenario and could suggest a return to the previous downtrend.
Key Levels
Resistance Levels:
- Resistance 4: 198.107
- Resistance 3: 195.776
- Resistance 2: 194.335
- Resistance 1: 193.030
Current Price: 192.649
Support Levels:
- Support 1: 192.004
- Support 2: 190.563
- Support 3: 188.232
Key Events to Watch
This week, key events that could impact the GBP/JPY pair include the UK’s retail sales data and the Purchasing Managers’ Index (PMI) reports, which will be closely watched by traders of the British pound. In Japan, the 10-year government bond auction on Tuesday and the annual household spending report on Friday are the main events that could influence the yen.
Conclusion
The GBP/JPY pair currently exhibits a bullish bias after breaking above the neutral range, with buyers targeting the 100-day moving average as a key resistance level. However, the outlook remains uncertain, with mixed signals from technical indicators and potential volatility stemming from upcoming economic data and central bank actions. Traders should remain vigilant, monitoring these developments closely to adapt their strategies accordingly.