GBP/JPY Price Analysis: Clings to 172.00 on risk-off impulse, as UK’s inflation remains high

Despite trading within a range, the GBP/JPY maintains an upward bias, bolstered by UK inflation figures and expectations of further tightening by the Bank of England.
GBP/JPY faces a potential pullback, suggested by the negative divergence between its price action and the Relative Strength Index (RSI), with support at 172.00 and the 20-day EMA at 170.27.
Further gains may be expected if GBP/JPY surpasses 173.00, with the falling wedge measuring an objective of 174.30.

Christian Borjon Valencia FXStreet

GBP/JPY clings to the 172.00 figure amidst a risk-off impulse as the US debt ceiling woes and the release of the US Federal Reserve (Fed) May minutes loom. Therefore, investors seeking safety moved toward safe-haven peers, except for the Japanese Yen (JPY), weakening against the Pound Sterling (GBP). At the time of writing, the GBP/JPY is trading around 172.30s.

GBP/JPY Price Analysis: Technical outlook

The GBP/JPY continues to trade within a range between the 171.22-172.79 area after inflation figures in the United Kingdom (UK) cooled down, except for the April Core Consumer Price Index (CPI) jumping by 6.8%, above the prior’s month and the consensus 6.2%. That underpinned the GBP as expectations for additional tightening by the Bank of England (BoE) increased.

The GBP/JPY is still upward biased, but since the break of a falling wedge, the pair’s rally towards the measured objective at 174.30 stalled. In n article written on May 23, I wrote: “After three consecutive sessions, the GBP/JPY failed to reach the 173.00 area, which, once cleared, could pave the way towards the 174.00 figure, ahead of getting the measured objective of the falling wedge.” However, Wednesday what no exception to the rule, as the GBP/JPY reached a high of 172.79 but retreated more than 50 pips, oscillating around 172.20s.

As the GBP/JPY price action achieved successive higher highs, the Relative Strength Index (RSI) indicator prints lower peaks. That means a negative divergence between price action and the RSI could open the door for a pullback.

Hence, the GBP/JPY first support is the 172.00 mark. A break below and the GBP/JPY will reach the 20-day Exponential Moving Average (EMA) at 170.27, with the 170.00 figure up for grabs.

On the flip side, if GBP/JPY hits 173.00, that could pave the way for further gains, lile the falling wedge measured an objective of 174.30.

GBP/JPY Price Action – Daily chart

GBP/JPY

Overview
Today last price	172.28
Today Daily Change	0.27
Today Daily Change %	0.16
Today daily open	172.01

Trends
Daily SMA20	170.23
Daily SMA50	166.53
Daily SMA100	163.66
Daily SMA200	164.02

Levels
Previous Daily High	172.63
Previous Daily Low	171.29
Previous Weekly High	172.51
Previous Weekly Low	168.91
Previous Monthly High	171.18
Previous Monthly Low	162.78
Daily Fibonacci 38.2%	171.8
Daily Fibonacci 61.8%	172.12
Daily Pivot Point S1	171.32
Daily Pivot Point S2	170.64
Daily Pivot Point S3	169.98
Daily Pivot Point R1	172.66
Daily Pivot Point R2	173.32
Daily Pivot Point R3	174

Author

Christian Borjon Valencia

FXStreet

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

AUD/USD rises to 0.6950 as USD slips on Fed's Warsh

AUD/USD regains traction and extends the bounce toward 0.6950 in the Asian session on Friday. Fed Chair Warsh's comments reinforce the selling pressure on the US Dollar, allowing the pair to stretch higher. Warsh said that he remains committed to delivering price stability without giving away anything on future interest rate path.

USD/JPY falls in symc with USD, gives up 158.00 after Warsh's speech

USD/JPY has come under fresh selling pressure and gives up 158.00 in the Asian session on Friday amid the emergence of fresh US Dollar selling. Fed Chair Warsh's non-committal commentary on the future tightening path, weighs on the US Dollar and the pair.

Gold looks vacillating above $4,150

Gold alternates gains with losses below the key $4,200 mark per troy ounce on Friday. The yellow metal’s irresolute price action comes in response to a modest pullback in the US Dollar and a tepid recovery in US Treasury yields across the board.

Bitcoin steadies at $82,000: The five forces crushing the Uptober rally

Crypto markets have remained under pressure so far in October, with Bitcoin (BTC) sliding below $80,000 earlier this week before recovering to around $82,000 on Friday, as macroeconomic headwinds and cooling demand weigh on the market.

The Fed just got a second hot inflation number. Here's what the diesel signal is really saying

The Federal Reserve (Fed) faces a renewed inflation challenge after two consecutive reports showed price pressure intensifying across the US economy. September's Consumer Price Index (CPI) confirmed accelerating consumer inflation, while the Producer Price Index (PPI) revealed an even sharper rise in business costs. Behind both reports lies a common factor: energy prices.

Everyone's dumping Gold after hot US inflation. Here's why $4,100 could be a floor, not a cliff

Gold (XAU/USD) is recovering from a sharp sell-off triggered by hotter-than-expected United States (US) inflation data released on Wednesday. The precious metal briefly plunged toward $4,073 as investors increased their bets on further Federal Reserve (Fed) interest rate hikes before recovering as US Treasury yields and the US Dollar (USD) reversed their initial gains.