GBP/JPY retreats modestly after reaching highest since June 2016
|- GBP/JPY drops after being unable to hold on top of 155.00.
- Key data ahead: Japanese PMIs and UK jobs report.
The GBP/JPY pair peaked during the European session at 155.37, the highest level since the Brexit referendum. Then it pulled back and erased gains. It bottomed at 153.70 and near the end of the day, it was hovering around 154.35, down 60 pips from yesterday’s close.
The yen was among the top performer on Tuesday. It gained momentum hours after the decision of the Bank of Japan to keep monetary policy unchanged. The outlook for economic activity was little change. During Kuroda’s press conference the yen bottomed but then bounced to the upside.
The pound today corrected after rising sharply on Monday. Yesterday’s rally was driven mainly by GBP/USD that rose to 1.4000 for the first time since the Brexit referendum. The rally pushed EUR/GBP to 1-month lows under 0.8800 and sent GBP/JPY to post the highest daily close since June 23, 2016.
On Wednesday the key economic event will the UK jobs reports. Earlier in Asian hours, the Japanese PMI will be released.
Technical outlook
GBP/JPY continues to move with a bullish bias. Today’s slide appears to be a normal correction. The pound needs to post a daily close significantly above 155.00 to clear the way to more gains. The next strong barrier is seen at 155.85.
On the flip side, support is seen at 153.60/70, below that level the pound would momentum. A key level to watch might be the 152.40/50 area (20-day moving average). A consolidation significantly below could point toward a stronger yen.
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