- GBP/JPY cross trades within an ascending trend-channel on the one-hour chart.
- The next support level is located at 184.35; the first resistance level is seen at 185.70.
- The Relative Strength Index (RSI) and MACD stand in bearish territory.
The GBP/JPY cross remains under pressure for the second consecutive day heading into the early European session on Friday. Market turn cautious amid the fear of China’s debt crisis and real-estate woes, which boost the Japanese Yen, a traditional safe-haven currency. However, the release of the UK Retail Sales could provide a clear direction for the cross.
On Thursday, Evergrande, China’s second-largest real estate company filed for bankruptcy in a US court under Chapter 15. This report fuels the fear of a potential Chinese property catastrophe. Furthermore, Fitch Ratings revealed on the same day that they might reconsider China's A+ sovereign credit rating in the face of intensifying economic headwinds. This, in turn, exerts pressure on the Pound Sterling and acts as a headwind for GBP/JPY.
From the technical perspective, the GBP/JPY cross trades within an ascending trend-channel since August 4 on the one-hour chart. The cross stands below the 50- and 100-hour Exponential Moving Averages (EMAs) with a downward slope, which means the path of the least resistance is to the downside.
That said, a decisive break below 185.20 (the lower limit of the ascending trend-channel and 100-hour EMA) will see a drop to 184.70 (low of August 16). The next contention is located at 184.35 (high of August 14). The additional downside filter to watch is the 184.00–184.10 region, representing a psychological round figure. The key support level is located at 183.00, portraying a confluence of a high of August 8 and the round mark.
On the upside, GBP/JPY’s immediate resistance level is seen at 185.70 (50-hour EMA). Any meaningful follow-through buying will see the next stop at 186.35 (a weekly high of December 4, 2015). The critical barrier is seen at 187.00 (a round figure and a weekly high of November 27, 2015).
It’s worth noting that the Relative Strength Index (RSI) is located below 50, while the Moving Average Convergence/Divergence (MACD) stand in bearish territory. Both momentum indicators highlight that further downside cannot be ruled out.
GBP/JPY one-hour chart
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 assets. 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 Open Markets 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. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD trades deep in red below 1.0300 after strong US jobs report
EUR/USD stays under bearish pressure and trades below 1.0300 in the American session on Friday. The US Dollar benefits from the upbeat jobs report, which showed an increase of 256,000 in Nonfarm Payrolls, and forces the pair to stay on the back foot heading into the weekend.
GBP/USD drops toward 1.2200 on broad USD demand
GBP/USD extends its weekly slide and trades at its weakest level since November 2023 below 1.2250. The data from the US showed that Nonfarm Payrolls rose by 256,000 in December, fuelling a US Dollar rally and weighing on the pair.
Gold ignores upbeat US data, approaches $2,700
Following a drop toward $2,660 with the immediate reaction to strong US employment data for December, Gold regained its traction and climbed towards $2,700. The risk-averse market atmosphere seems to be supporting XAU/USD despite renewed USD strength.
Sui bulls eyes for a new all-time high of $6.35
Sui price recovers most of its weekly losses and trades around $5.06 at the time of writing on Friday. On-chain metrics hint at a rally ahead as SUI’s long-to-short ratio reaches the highest level in over a month, and open interest is also rising.
Think ahead: Mixed inflation data
Core CPI data from the US next week could ease concerns about prolonged elevated inflation while in Central and Eastern Europe, inflation readings look set to remain high.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.