• Japanese yen soars across the board after economic data.
  • July US CPI rises below expectations triggering a rally in Treasuries.
  • GBP/JPY trims losses after falling to as low as 161.67, the lowest since August 5.

The GBP/JPY cross lost almost 200 pips following the release of US inflation data that triggered a rally of the Japanese yen across the board. It bottomed at 161.67 and then rebounded back above 162.00.

US CPI ends a quiet period

The annual US CPI rate dropped from 9.1% to 8.5% in July, against the market consensus of 8.7%. The numbers triggered a rally in US stocks and bonds. Expectations still point to more tightening from the Federal Reserve, but the doors are open to less aggressive action. Still, market participants see a rate hike of at least 50 basis points at the next meeting.

The improvement in risk appetite failed to boost GBP/JPY that pulled back amid lower yields and despite the rally of GBP/USD above 1.2200.

The GBP/JPY cross was testing the key resistance around 163.60 before the report. In the move lower, it broke 162.80, which is now the immediate resistance.

Technical indicators favor the downside in the short term. A recovery above 162.80 would put the pound back on its way for another test of 163.80. While under 162.80, the crucial area on the downside is 162.00; a break lower would expose the next support zone at 161.10.

GBP/JPY 4-hour chart

GBPJPY

GBP/JPY

Overview
Today last price 162.34
Today Daily Change -0.80
Today Daily Change % -0.49
Today daily open 163.14
 
Trends
Daily SMA20 163.71
Daily SMA50 164.29
Daily SMA100 163.01
Daily SMA200 158.56
 
Levels
Previous Daily High 163.68
Previous Daily Low 162.63
Previous Weekly High 163.99
Previous Weekly Low 159.45
Previous Monthly High 166.34
Previous Monthly Low 160.4
Daily Fibonacci 38.2% 163.28
Daily Fibonacci 61.8% 163.03
Daily Pivot Point S1 162.62
Daily Pivot Point S2 162.1
Daily Pivot Point S3 161.57
Daily Pivot Point R1 163.67
Daily Pivot Point R2 164.2
Daily Pivot Point R3 164.72

 

 

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