The GBPJPY currency pair is staging a rebound, poised to conclude back-to-back days of gains following a recent three-day decline.
This resurgence in the British Pound comes amidst a shift in market sentiment, bolstered by encouraging economic indicators. Upbeat UK data, particularly the Composite and Services PMI figures surpassing expectations at 52.1 and 53.4, respectively, have instilled optimism about the British economy’s short-term outlook. Conversely, Japan’s manufacturing sector showed a slight weakening in December.
All eyes are now on the forthcoming Services PMI report to gauge whether Japan’s service sector will counterbalance this trend. The juxtaposition of these economic reports is expected to influence the trajectory of the GBPJPY pair, intertwining sentiment shifts and fundamental data.
Technical
Since mid-December, the GBPJPY currency pair has navigated within distinct levels, pivoting around crucial support at 178.333 and resistance at 184.280. Recent movements witnessed the pair edging closer to the support level, nearing oversold RSI conditions, signalling a reversal. This shift came on the heels of encouraging UK economic data, revitalizing confidence in the British Pound and redirecting the pair’s trajectory upward.
Should the current upward momentum be sustained, a retesting of the 184.280 resistance level is probable. However, in the event of mounting bearish pressures, attention might shift to the 50% Fibonacci Retracement level as a potential short-term downside marker.
Summary
The GBPJPY’s recent rebound, driven by upbeat UK economic data, underscores the impact of such data on market sentiment. As the pair oscillates between pivotal support and resistance levels, Japan’s Services PMI’s impending release will likely dictate the pair’s short-term trajectory.
Sources: S&P Global, Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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