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    IronFX Intraday Comment |GBP/JPY | 22/10/2015

    • The dollar traded mixed against its G10 peers during the European morning Thursday, ahead of the ECB rate decision later in the day. It was higher against EUR, CHF and NOK, in that order, while it was lower against NZD, GBP, CAD, JPY and AUD. The greenback was virtually unchanged against SEK.

    • The British pound surged after the UK retail sales excluding fuel rose 1.7% mom in September, a rebound from the -0.7% mom in the previous month. The figure beat expectations of 0.3% mom. GBP/USD jumped and made another attempt to break above 1.5500 resistance zone, but failed to do so and fell back below that hurdle. Nevertheless, coming on top of low inflation and strong wage growth, the positive surprise is likely to suggest that consumer spending could remain supported going forward and boost the growth in Q3. In such case, I believe that the pound is likely to regain its strength in the medium term.

    • GBP/JPY traded higher during the European morning Thursday following the better-than-expected UK retail sales data. However, the positive leg was stopped once again by the 185.60 (R1) key obstacle. The rate is still trading within a short-term upside channel, which keeps the near-term bias positive. However, I prefer to see a clear break above 186.00 (R2) before I trust that uptrend. Such a move is likely to open the way for our next resistance at 187.30 (R3). Taking a look at our oscillators, I see that there is negative divergence between both of them and the price action. This is another reason I believe it would be better to wait for a break above 186.00 (R2) before getting confident on the upside. As for the broader trend, the completion of a double top formation on the 24th of August has turned the medium-term outlook somewhat negative. However, the fact that the rate printed a higher low on the 2nd of October makes me adopt a flat stance for now as far as the longer-term picture is concerned.

    • Support: 184.50 (S1), 183.80 (S2), 182.90 (S3)

    • Resistance: 185.60 (R1), 186.00 (R2), 187.30 (R3)


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