The GBPJPY currency pair appears poised for its ninth consecutive day of decline in the last twelve, influenced by recent data from the UK that exerted pressure on the pound. The labour data revealed a shift in employment of 50,000, marking a slowdown from the previous 54,000, while the unemployment rate held steady at 4.2%.
Additionally, wage growth contracted, with average earnings, including bonuses, registering a 7.2% increase—lower than the preceding 8% and the anticipated 7.7%. Meanwhile, in Japan, the year-over-year PPI dipped from 0.9% to 0.3%, surpassing the 0.1% forecast but contributing further to the strain on the currency pair.
Technical
On the 4H chart, an ascending channel has been broken down, as the pair failed to clear the psychological resistance at 187.968. The retracement passed the 61.8% Fibonacci golden ratio at 182.121 before finding support. As we advance, the pair could initiate a pullback from the recent selloff but faces challenging hurdles in the upcoming sessions.
The 100-SMA (orange line) and 50-SMA (blue line) at 183.728 and 184.235, respectively, could be the first challenge the buyers will face. Higher resistance at 184.637 and 185.425 could come into play if the pair shifts above the multiple-SMAs, with the 25-SMA at 185.834 potentially offering a last line of defence to the retest of the channel breakdown point at 186.579.
However, failure to exceed the multiple SMAs could add to the recent downside pressure. A retest of 182.121 could then become likely, while lower support is established at 180.962. Should the selling pressure continue, a demand zone at 179.812 could hold buyers in the longer term to prevent further downside.
Summary
On track for another day of decline, the GBPJPY currency pair faces challenging resistance from multiple SMAs on the 4H chart. These levels may need clearance if the retracement from the recent channel breakdown could continue into the week’s latter sessions.
Sources: Koyfin, Tradingview
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
Disclaimer: Trive South Africa (Pty) Ltd, Registration number 2005/011130/07, and an Authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act 2002 (FSP No. 27231). Any analysis/data/opinion contained herein are for informational purposes only and should not be considered advice or a recommendation to invest in any security. The content herein was created using proprietary strategies based on parameters that may include price, time, economic events, liquidity, risk, and macro and cyclical analysis. Securities involve a degree of risk and are volatile instruments. Market and economic conditions are subject to sudden change, which may have a material impact on the outcome of financial instruments and may not be suitable for all investors. When trading or investing in securities or alternative products, the value of the product can increase or decrease meaning your investment can increase or decrease in value. Past performance is not an indication of future performance. Trive South Africa (Pty) Ltd, and its employees assume no liability for any loss or damage (direct, indirect, consequential, or inconsequential) that may be suffered from using or relying on the information contained herein. Please consider the risks involved before you trade or invest.
