GBP/JPY recovers the 20-day SMA, no signs of BoJ pivot

GBP/JPY jumped to 185.00, seeing nearly 0.50% daily gains, recovering the 20-day SMA.
BoE tightening expectations remain steady, and BoJ will likely maintain its dovish outlook.
Monetary policy divergences drive the pair upwards.

Patricio Martín FXStreet

At the start of the week, the GBP/JPY cross jumped towards 185.00 and recovered the 20-day Simple Moving Average (SMA) of 184.60. No relevant economic data will be released on the session for either country, and monetary policy divergences favour the GBP over the JPY.

On the Pound’s side, the UK will have a quiet week, with the final revisions of PMIs on Tuesday being the only highlight. As for now, World Interest Rates Probabilities (WIRP) shows that market participants are discounting higher odds of the Bank of England (BoE) increasing rates by an additional 0.50% of tightening beyond the December meeting, resulting in a total increase to the 5.75%- 6% range. In line with that, the expectations of a more aggressive BoE may limit the GBP’s losses against its rivals.

On the other hand, the BoJ's recent statements underline their commitment to aligning monetary policy with local wage and inflation trends. In that sense, Japan will report household spending figures from July on Tuesday and cash earnings data from July on Friday, which will give further insights to market participants and the BoJ into the current situation of the Japanese economy. Unless the bank does not see the required wage growth, it will likely maintain its dovish approach, leaving the JPY vulnerable.

GBP/JPY Levels to watch

The technical analysis of the daily chart suggests a neutral to bullish stance for GBP/JPY as the bulls work on recovering their ground. The Relative Strength Index (RSI) exhibits a bullish inclination with a positive slope above the 50 threshold, while the Moving Average Convergence (MACD) prints weaker red bars. Additionally, the pair is above the 20,100,200-day Simple Moving Average (SMA), pointing towards the prevailing strength of the bulls in the larger context.

Support levels: 183.50, 183.00, 182.00.

Resistance levels: 185.00, 186.00, 187.00.

GBP/JPY Daily Chart

GBP/JPY

Overview
Today last price	185
Today Daily Change	0.90
Today Daily Change %	0.49
Today daily open	184.1

Trends
Daily SMA20	184.52
Daily SMA50	182.97
Daily SMA100	177.78
Daily SMA200	169.98

Levels
Previous Daily High	184.56
Previous Daily Low	183.54
Previous Weekly High	186.07
Previous Weekly Low	183.54
Previous Monthly High	186.77
Previous Monthly Low	180.46
Daily Fibonacci 38.2%	183.93
Daily Fibonacci 61.8%	184.17
Daily Pivot Point S1	183.57
Daily Pivot Point S2	183.05
Daily Pivot Point S3	182.55
Daily Pivot Point R1	184.59
Daily Pivot Point R2	185.08
Daily Pivot Point R3	185.61

Author

Patricio Martín

FXStreet

Patricio is an economist from Argentina passionate about global finance and understanding the daily movements of the markets.

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