GBP/JPY hangs on to recovery gains around 157.30 area, lacks bullish conviction

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  • GBP/JPY regained positive traction on Friday and recovered some of the overnight decline.
  • The risk appetite drive undermined the safe haven JPY and extended support to the pair.
  • A gloomy outlook for the UK economy could act as a headwind and limit any further upside.

The crossing GBP/JPY it maintained its offered tone during the mid European session and was last seen trading around the 157.35 region, up nearly 0.50% on the day.

A nice recovery in global risk sentiment, as shown by a generally positive tone in equity markets, undermined the safe-haven Japanese yen on Friday. This, in turn, was seen as a key factor causing some short-covering moves around the GBP/JPY cross and allowing the pair’s prices to move further away from a nearly two-month low hit the day before.

The rally attempt, however, lacked bullish conviction amid fears of an impending recession, further fueled by softer UK macroeconomic releases on Thursday. The data suggested that the Bank of England’s rate hike cycle may be coming to a halt. This could continue to act as a headwind for the British pound and prevent traders from making aggressive bullish bets on the GBP/JPY cross.

From a technical perspective, the price stalled in the recent downtrend on Thursday ahead of the very important 200-day SMA. The subsequent up move supports the prospects for further gains. That said, the fundamental backdrop makes it prudent to wait for strong follow-on buying before confirming that the GBP/JPY cross has bottomed out in the near term.

Technical levels

GBP/JPY

Panorama
Last Price Today 157.32
Today’s Daily Change 0.70
Today’s Daily Change % 0.45
Today’s Daily Opening 156.62
Trends
20 Daily SMA 162.78
50 Daily SMA 160.24
100 Daily SMA 157.91
200 Daily SMA 155.17
levels
Previous Daily High 159.31
Previous Daily Minimum 155.6
Previous Maximum Weekly 163.91
Previous Weekly Minimum 160.32
Monthly Prior Maximum 168.44
Previous Monthly Minimum 159.64
Daily Fibonacci 38.2% 157.02
Daily Fibonacci 61.8% 157.89
Daily Pivot Point S1 155.04
Daily Pivot Point S2 153.46
Daily Pivot Point S3 151.33
Daily Pivot Point R1 158.76
Daily Pivot Point R2 160.89
Daily Pivot Point R3 162.47

Source: Fx Street

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