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    IronFX Intraday Comment | GBP/JPY | 14/10/2015

    • The dollar traded lower against almost all of its G10 peers during the European morning Wednesday, ranging from -0.15% against JPY to -0.80% vs NZD. The greenback was virtually unchanged against SEK and CAD.

    • The British pound erased Tuesday’s losses following the disappointing CPI data, to trade a bit higher following the strong UK employment report. Even though the average weekly earnings rose less than expected, they still rose at a faster pace than previously. What’s more, the unexpected decline in the unemployment rate to 5.4% in August from 5.5% in July, added further strength to the overall strong job report. With the inflation rate at 0% in August, this data suggest that real wages rose even faster. Therefore, I would expect GBP to continue trading somewhat higher in the next few days, as investors re-price their expectations for a rate hike by the BoE.

    • GBP/JPY traded higher during the European morning Wednesday following the strong UK job report. The pair broke above the resistance-turned-into-support barrier of 183.30 (S1) and currently moves towards our next resistance at 183.90 (R1). A decisive break above that area is needed to trigger larger bullish extensions and perhaps challenge our next resistance at 184.30 (R2). Our short-term momentum studies support this notion. The RSI broke above its 50 line and points up, while the MACD, poked its nose above its zero and trigger lines. Switching to the daily chart, I see that GBP/JPY found support at the trend line taken from back the lows of 14th of October 2014 and rebounded strongly. As a result, I would prefer to adopt a neutral stance as far as the overall picture is concerned. A break below the aforementioned trend line is likely to shift the bias to the downside, while a break above 185.00 is needed to trust further medium-term advances.

    • Support: 183.30 (S1), 183.00 (S2), 182.60 (S3)

    • Resistance: 183.90 (R1), 184.30 (R2), 184.70 (R3)

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