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GBPJPY Fuelled by Risk-On Move

GBPJPY Fuelled by Risk-On Move

Nick Cawley, Senior Strategist


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GBPJPY News and Talking Points

- GBP remains underpinned by solid economic fundamentals and positive Brexit backdrop.

- JPY strength may return in the medium-term.

The Traits of Successful Traders and how to find the Number One Mistake Traders Make are just two of the most widely read reports in our Free Trading Guides.

GBPJPY Caught Between Moving Averages

The recent bout of risk-off sentiment drove GBPJPY down to just under 145.000, its lowest level since September 2017, despite a positive set-up in GBP as US trade war fears roiled markets. A brief respite in market sentiment has seen the pair trade back up to 149.00 and back above its 20-day moving average. The pair now sit just below the 50-day ma at 149.70 and the longer 100-day ma at 150.90, while the stochastic indicator sits mid-market.

A lack of any heavyweight data for either currency this week – UK final Q4 GDP on Thursday aside - leaves any potential GBPJPY move driven squarely by risk sentiment, namely the ongoing trade war spat between the US and China. While a further rebound in GBPJPY may look likely, especially with all the recent GBP-positive news, the speed of the risk sell-off seen last week points to further market turbulence ahead and may see the Japanese Yen appreciate further.

GBPJPY Price Chart Daily Time Frame (October 9, 2017 – March 26, 2018)

Chart by IG

Retail Traders Net-Long of GBPJPY

Retail trader data show 53.6% of traders are net-long with the ratio of traders long to short at 1.15 to 1. In fact, traders have remained net-long since Mar 16 when GBPJPY traded near 148.155; price has moved 0.1% lower since then. The number of traders net-long is 8.9% lower than yesterday and 10.2% lower from last week, while the number of traders net-short is 11.2% lower than yesterday and 21.0% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBPJPY prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger GBPJPY-bearish contrarian trading bias.

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What’s your opinion on GBPJPY?Share your thoughts with us using the comments section at the end of the article or you can contact the author via email at or via Twitter @nickcawley1.

--- Written by Nick Cawley, Analyst

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.