Skip to content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
Oil - US Crude
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
GBP/JPY Price Analysis: GBPJPY Under Pressure Amid Harsher Lockdown

GBP/JPY Price Analysis: GBPJPY Under Pressure Amid Harsher Lockdown

Richard Snow, Analyst

GBP/JPY Talking Points:

  • UK government considering harsher lockdown restrictions similar to March 2020
  • GBP/JPY short-term outlook; range possibilities and threat of continued Sterling weakness
  • Overwhelmingly short client sentiment leaves the door open for trend continuation
Advertisement

UK Entering a Challenging Few Weeks Ahead

As the UK continues to roll out vaccinations, it is reported that the region is facing the worst weeks of the pandemic according to its chief medical officer. Logistics challenges in the rollout of the vaccine coupled with a new variant of the disease have been said to result in a challenging period in the race to regain some normality before the spring.

Tighter lockdown rules seem likely, which could have a detrimental effect on Sterling crosses. Adding to this, UK GDP for the three months up to November is due on Friday and is forecast at 3.4%, sizably lower than the previous three month period (June to August) of 10.2%

DailyFX economic calendar

For all market-moving data releases and events see the DailyFX Economic Calendar

Trading Forex News: The Strategy
Trading Forex News: The Strategy
Recommended by Richard Snow
Learn how to prepare and trade around the news
Get My Guide

GBP/JPY Trading Outlook

The long term uptrend remains intact even though price action has moved lower since creating the recent high around 141.40. The weaker Sterling thus far presents a retracement towards the steeper trendline support and if broken, a further sell-off could see the pair approach the recent low around 139.50.

GBP/JPY: Daily Chart

GBPJPY daily chart

Chart prepared by Richard Snow, IG

Using multiple time frame analysis - zooming into the 4-hour chart – there appears to be a period of consolidation as price oscillates around 141.38 and 139.50. The 139.50 is significant as past price action approached but did not break below this level of support. The stochastic oscillator has once more entered oversold territory which may interest bullish traders with a potential bounce off the ascending trendline support line.

However, the potential threat of a harsher lockdown in the UK may result in an extended sell-off which could see GBP/JPY trade closer to horizontal support around 139.50.

A bounce off the ascending trendline however, could suggest that the bullish trend is not done yet. Resistance remains at the recent high of 141.40. Subsequent buying would the bring into focus the September high of 142.70.

GBP Forecast
GBP Forecast
Recommended by Richard Snow
See what our analysts forecast for Sterling this quarter
Get My Guide

GBP/JPY: 4-Hour Chart

GBPJPY: 4-hour chart

Chart prepared by Richard Snow, IG

Significant Short Sentiment Opens the Door to the Upside

GBPJPY sentiment
  • EUR/JPY: Retail trader data shows 38.95% of traders are net-long with the ratio of traders short to long at 1.57 to 1.
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EUR/JPY prices may continue to rise.
How to Use IG Client Sentiment in Your Trading
How to Use IG Client Sentiment in Your Trading
Recommended by Richard Snow
Learn how to read and apply client sentiment
Get My Guide
  • The number of traders net-long is 10.29% higher than yesterday and 16.25% lower from last week, while the number of traders net-short is 8.81% higher than yesterday and 10.82% higher from last week.
  • Positioning is less net-short than yesterday but more net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EUR/JPY trading bias.
GBP/JPY Bullish
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 3% 6% 5%
Weekly -31% 36% 7%
Learn how to use Sentiment in your trading strategy
Get My Guide

--- Written by Richard Snow for DailyFX.com

Contact and follow Richard on Twitter: @RichardSnowFX

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

DISCLOSURES