- The GBP/JPY recovered from lowest levels since November and reached a high of 149.88 amid volatile trading.
- A better market mood is supporting the cross.
The GBP/JPY is trading above 149.00 after reaching a high of 149.88, a rise from the lows of 147.97 recorded in earlier. US inflation data came out above expectations. Core CPI rose by 1.8% y/y, above 1.7% that was expected. Other inflation data all came out above expectations. An elevated level of inflation implies a faster pace of rate hikes in the US. Stock futures reacted negatively to the report sending the US dollar and the Japanse yen to higher ground.
The fear receded later on as stocks opened with modest drops and then turned positive. A consequent drop in the VIX volatility index also helped improve the mood. The USD/JPY stabilized while the GBP/USD moved quickly higher. The result is a recovery in the GBP/JPY cross.
In the UK, Foreign Secretary Boris Johnson called for moving forward with Brexit. Further speeches related to Britain's exit from the European Union are due in the next few days. In Japan, GDP came out at 0.1% q/q, slightly below 0.2% that was forecast.
GBP/JPY technical picture
The GBP/JPY temporarily dropped below the double-bottom of 148.90 but recovered quickly. It made an attempt to move above the downtrend channel as shown on the 30-minute chart but retreated.
The RSI is in positive territory but not in the overbought ground. The indicator touched oversold territory before rebounding. Momentum has turned positive.
Looking up, resistance awaits at 149.85 that capped the cross earlier on. Further above, 150.75 is another level to watch after it held the pair down earlier in the week.
On the downside, 148.90 remains relevant as a line of support. It is followed by 148.65 where the pair bounced from earlier this week and 148, today's swing low is another notable line.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Forex involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.