- The GBP/JPY stays positive in the week, gaining 0.42%.
- A fragile sentiment triggered by recession fears might send the pair tumbling and erase the pound’s weekly gains.
- GBP/JPY Price Analysis: Upward biased in the medium term, but the short term is consolidating and might fall if sellers step in and could dive towards 164.00.
The GBP/JPY barely advances during the Asian session, up 0.02%. However, on Thursday, the GBP/JPY plunged from around 167.00 to 164.65, though it staged a comeback and lost only 160 pips. At 165.41, the GBP/JPY, albeit above the 20-day exponential moving average (EMA), remains under selling pressure amidst a mixed market sentiment.
The reflection of the above-mentioned is that Asian equity futures are rising while US indices are falling. Fears of a US and global recession increased after Thursday’s worldwide S&P Global PMIs, although in expansionary territory, dipped. Investors sounded the alarms and flew towards safe-haven assets, like the Japanese yen in the FX market.
Read also: Forex Today: Run to safety only beginning
GBP/JPY Price Analysis: Technical outlook
Daily chart
From a technical perspective, the GBP/JPY is upward biased, as the exchange rate failed to break below the 20-EMA. Also, the Relative Strength Index (RSI) dwells in bullish territory, meaning there’s some buying pressure on the pair, but solid resistance lies ahead.
4-hour chart
In the near-term, GBP/JPY price action shows consolidation lying ahead; though successive series of a Lower high (LH) and a Lowe low (LL), and with the pair meandering around the 50 and 100-4H-EMAs, a breach of them would open the door for a possible fall towards 164.47.
Therefore, the GBP/JPY first support would be 100-4h-EMA at 164.95. A breach of the latter exposes the 50-EMA at 164.64, followed by the swing low mentioned above at 164.47. If the pair clears the latter, the GBP/JPY might tumble to the 200-4H-EMA at 162.38.
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