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    IronFX Intraday Comment | GBP/JPY | 19/11/2015

    • The dollar traded unchanged or lower against its G10 counterparts during the European morning Thursday. It was lower against NZD, JPY, AUD and CHF, in that order, while it stayed virtually unchanged against CAD, EUR, GBP and NOK.

    • The British pound weakened a bit after the UK retail sales excluding fuel fell 0.9% mom in October, a turnaround from 1.5% mom previously. The figure was below expectations of -0.5% mom. GBP weakened following the news but recovered most of its losses in the following minutes. Even though the labor market continue to show signs of improvement and inflation remains near zero levels, consumers seem to hold back from spending. This raises concerns whether the UK economy will slow further in the final quarter of the year or if October’s fall was just a noise. Consumers may also pause from spending due to the holiday season in the coming weeks. A strong figure in November will offset the disappointment in October and will support our view that the recent improvements in the labour market could boost UK’s outlook for Q4. In such case, I believe that the pound is likely to regain its strength in the medium term.

    • GBP/JPY traded lower during the European morning Thursday, after it hit resistance at 188.80 (R1). However, the decline was stopped near 187.60 (S1). The outlook remains positive in my view, but I see signs that the setback may continue for a while. A clear move below 187.60 (S1) is likely to confirm that and perhaps open the way for our next support of 186.80 (S2). Our short-term momentum studies support that the setback may continue for a while. The RSI edged lower after it exited its above-70 territory, while the MACD has topped and looks able to fall below its trigger line soon. On the daily chart, I see that the pair started trading higher after it printed a higher low at around 180.65. The move above the 188.00 zone yesterday overcame the previous high, something that shifts the medium-term picture somewhat positive in my view. Therefore, I would treat any further near-term declines as a corrective move of a possible medium-term uptrend.

    • Support: 187.60 (S1), 186.80 (S2), 186.00 (S3)

    • Resistance: 188.80 (R1), 189.00 (R2), 190.00 (R3)


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