Short-Term Forex Technical Outlook: GBP/JPY

Currency Pair: GBP/JPY
Chart: 60 Min Charts
Short-Term Bias: Flat

Analysis

The GBPJPY has held within a tight range throughout the week, but as market participants expect the Bank of England to lower the benchmark interest rate later today, price action following the rate decision should help to shed some light on the future direction of the pair. After reaching a high of 165.11 on 10/30, the pound-yen slipped to a low of 118.83 in January, and we may see the pair continue to trade within a broad range over the near-term as Japan and the U.K. face a deepening recession. As the fundamental outlook for the both of the industrialized economies weighs on the exchange rate, the GBPJPY continues to find resistance at 141.90-142.00 (50.0% Fib), which could lead the pair lower over the next few hours of trading to fill in the gap from the 120 SMA however, if the Bank of England concludes its easing cycle and provides an improved outlook for future growth, a rise in risk appetite could lead the pair higher over the remainder of the week. Nevertheless, as the IMF expects Europe’s second largest economy to face its worst economic slump since World War II, comments from the central bank is likely to reinforce the dire state of the economy, and would keep the pair within range going forward. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.

To contact the author of this article, please email: dsong@fxcm.com

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