- GBP/JPY finds itself at the upper end of short-term technical resistance.
- Next week will see a rich economic calendar for the UK.
- Japan’s GDP growth is scheduled for next Thursday.
GBP/JPY found itself back at familiar technical levels near 188.50 on Friday after bouncing back from the 186.20 region earlier in the week, as the pound sterling (GBP) outperformed the Japanese yen (JPY), which spent most of the week on a mild side note.
This week was a tight economic calendar for both currencies, leaving the Guppy pair crippled as investors grappled with the prospect of interest rate cuts from both countries. Bank of England (BoE) and the Bank of Japan (BoJ). Both central banks seem quite dovish for opposite reasons, with the BoE grappling with a tilted UK economy that sees inflationary threats around every corner and the BoJ worried about a deflationary overhang in the future, with Japanese inflation forecast to fall below Japanese levels . 2% target of the central bank in the coming months.
BoE Bailey, Japan GDP in pipeline for next week
BoE policymaker Haskel noted early on Friday that while signs of progress in UK inflation were encouraging, there was still plenty of room for clarification in the BoE’s playbook and money markets had once again trimmed bets on a UK rate cut. Central Bank. Rate markets now see less than a 75 basis point rate cut from the BoE in 2024.
Next week begins with BoE Governor Andrew Bailey giving a speech at England’s Loughborough University. Mid-week we will also see UK jobs data as well as consumer data Price index Inflation (CPI) and UK GDP growth, will round out the UK retail sales data week next Friday.
Japan reports GDP growth numbers early on Thursday and markets are forecasting a rebound in Japan’s fourth-quarter growth to 0.3% quarter-on-quarter, compared to a -0.7% decline in the previous quarter.
GBP/JPY Technical Outlook
GBP/JPY continues to clatter along the short-term technical ceiling south of 189.00, finding a spot near 188.80 before pulling back to the 188.50 area before Friday’s closing bell. The pair rose cleanly through the 200-hour simple moving average (SMA) near the 187.00 handle earlier in the week, and intraday momentum remains in the hands of the bidders despite signs of congestion.
189.00 remains a key but tricky level for GBP/JPY to break, with prices capped below the target level and keeping the Guppy below the 190.00 key handle. The pair continues to trade into firmly bullish territory with the 200-day SMA near 182.11, well below the current price. Guppy bids have not touched the long-term SMA since the drop to 179.00 at the start of 2024.