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GBP/JPY nears one-week highs around 161.50 after UK data

  • The GBP/JPY cross gained strong positive traction for the third day in a row and soared to a one-week high.
  • The British pound saw aggressive short-covering in reaction to the positive UK jobs report.
  • Risk appetite momentum undermined the yen haven and continued to support the upside move.

The crossing GBP/JPY it maintained its strong bid tone through the middle of the European session and was last seen around 161.50, just a few pips shy of a one-week high.

The cross built on last week’s strong rebound from close to the important 200-day SMA and rose for the third day in a row on Tuesday. Sterling strengthened across the board after the latest UK jobs report showed the ILO jobless rate dipped to 3.7% in the three months to March from 3.8% previously.

Additional data revealed that the number of people applying for jobless benefits fell by 56.9 thousand in April. The data points to a tense situation in the UK labor market and bets are rising for a further interest rate hike by the Bank of England at next month’s meeting. This, in turn, led to aggressive short-covering of sterling crosses.

Elsewhere, the boost in risk appetite, represented by the strong rally in global equity markets, undermined demand for the safe-haven Japanese yen. In addition, the more dovish stance taken by the Bank of Japan further weighed on the domestic currency, providing an additional boost and contributing to the strong rise in the GBP/JPY pair.

However, it remains to be seen whether the bulls are able to maintain their dominant position amid the dispute between the UK and the EU over the Northern Ireland protocol. However, the GBP/JPY pair has recovered almost 50% of its recent sharp corrective pullback from a five-year high. As investors digest UK macroeconomic data, attention is turning back to Brexit developments.

Technical levels

GBP/JPY

Panorama
Last Price Today 161.67
Today’s Daily Change 2.50
Today’s Daily Change % 1.57
Today’s Daily Opening 159.17
Trends
20 Daily SMA 162.13
50 Daily SMA 160.53
100 Daily SMA 158.01
200 Daily SMA 155.23
levels
Previous Daily High 159.28
Previous Daily Minimum 157.44
Previous Maximum Weekly 162.19
Previous Weekly Minimum 155.6
Monthly Prior Maximum 168.44
Previous Monthly Minimum 159.64
Daily Fibonacci 38.2% 158.58
Daily Fibonacci 61.8% 158.14
Daily Pivot Point S1 157.98
Daily Pivot Point S2 156.79
Daily Pivot Point S3 156.14
Daily Pivot Point R1 159.82
Daily Pivot Point R2 160.47
Daily Pivot Point R3 161.67

Source: Fx Street

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