GBP / JPY stalls around 158.00 on weaker UK CPI reading

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  • GBP / JPY stalls around 158.00 on a softer-than-expected UK inflation reading.
  • Risk appetite in the market boosts the risk-sensitive outlook for the British pound.
  • GBP / JPY: The pair is sloping higher, but any lower correction could be a good opportunity for buyers.

The GBP/JPY it maintains its uptrend around 158.00, however, it rises 0.10% during the American session, trading at 157.95 at the time of writing this article. Market sentiment remains positive, despite central banks seeking to normalize monetary policy conditions, higher energy prices, and the announcement of a phasing-out of Federal Reserve bonds.

The British pound fell on Wednesday following the release of the UK CPI, which showed September’s Consumer Price Index rose 3.1% annually, below the 3.2% forecast by analysts. Additionally, the UK’s core CPI, which excludes volatile food and energy prices, slowed to 2.9% annually, down from August’s reading of 3.1%.

Despite the lower inflation reading, the market still expects the Bank of England (BoE) to raise interest rates before the end of the year, which will finally give GBP / JPY a boost when the pair fell below 158.00.

That said, and if the Bank of England rate hike prospects remain on investors’ minds, the British pound could appreciate further in the coming days.

GBP / JPY Price Forecast: Technical Outlook
Daily chart

GBP / JPY’s uptrend is overextended, as shown by the Relative Strength Index (RSI), a momentum indicator at 78 within the overbought area, indicating that the pair could correct before resuming the ongoing trend. However, as long as the daily moving averages (DMA) stay well below the price of the cross, this favors the British pound.

In the event of a downward correction, there could be some buyers falling around the October 18 low at 156.60, immediately followed by the May 27 high at 156.07.

On the other hand, if the GBP / JPY rally spreads, a daily close above the psychological level of 157.00 could open the way for a test of 158.00.

ADDITIONAL LEVELS

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