GBPJPY, 240 min
Sterling has been underperforming today, guided lower by a big miss in the UK RBC retail sales figure, which unexpectedly fell 0.4% y/y in the headline like-for-like measures. However, now the UK October production came in above forecasts in rising 0.1% m/m and 1.7% y/y. That’s above our survey’s median forecasts for 0.0% m/m and 1.2% y/y growth. September data were also revised higher, to 0.0% m/m from -0.2% and to 1.5% y/y from 1.1%. The narrower manufacturing output measure disappointed, however, at -0.4% m/m and -0.1% y/y, though September data were revised higher. The ONS stats office reported that there were expansion “in three of the four main sectors, with mining and quarrying output being the largest contributor.” Mining and quarrying rose by 8.5%, which explains the outperformance of the industrial output measure relative to manufacturing. The forecast-beating headline only had a fleeting and minor positive impact on the pound, which has subsequently fall to intraday lows against both the dollar and the euro.
Technically I like GBP against JPY for a short term long trade from current levels. The GBPJPY pair has broken above two trend lines and is currently trading near a pivotal support and outside the lower Bollinger Bands. Stochastics is oversold while the last 4h candle is currently a narrow range candle that indicates a turnaround in this pair. My target is 185.45.
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