GBP/JPY is on the offer with a number of fundamentals at play.
GBP/JPY has been in recovery mode for the best part of July post Brexit vote, enabled by a recovery in global stocks and sentiment with much piped up pessimism that actually has not come to fruition and resilient markets have come to the pounds rescue so far. The Yen in its own right is weak though on the back of sentiment surrounding a struggling Japanese economy and Abenomics 2.0 on the horizon.
However, while the BoE restrained from acting too soon to support the fall out of the Brexit vote in the UK economy, data has started to prove that Brexit may have already started to harm the economy and MPC members are starting to call for action from the BoE, with top banks such as RBS, one of the most bearish of the Banks on the UK, calling for the possibility of negative rates if the BoE indeed cuts rates to below zero in August. Meanwhile, the Yen seems to be bid on buy the news sell the fact as we head towards the BoJ this week. Stock markets and risk sentiment is waning while we await the outcomes of both the BoJ and FOMC.
GBP/JPY levels
The 200 sma on the 4hr sticks at 141.43 has proven to be an area of possible resistance given the market's reluctance to challenge it on rallies and on this move, we are testing the late June highs that should they give way fully with a break of the 100 sma on the 4hr sticks at 136.73, 132.00 is the next psychological level and July low 128.62 come into picture.
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