GBP/JPY rises past 181.50, threatening the 20-day SMA

GBP/JPY cleared most of its weekly losses trading near 181.80 tractioned by rising British yields.
Investors continue to look for clues regarding a potential BoJ YCC policy tweak.
BoE’s tightening expectations have fallen, and markets now see rates peaking at 6.25%.

Patricio Martín FXStreet

On Friday, the Sterling traded with gains agains the JPY, but it is still poised to close a weekly decline. However, the GBP/JPY downside potential may be limited while investors are looking for clues on whether the Bank of Japan (BoJ) will tweak its monetary policy in July.

As for now, markets have already largely discounted a 50 basis point (bps) hike in the August 3 Bank of England (BoE) meeting and foresee 25 bps hikes in September, November and in Q1 2024, which would see the policy rate peaking at 6.25% vs the 6.50% terminal rate expected at the beginning of the week.

Despite tightening expectations falling, British bond yields are on the rise and lend support to the GBP. The 2-year bond yield rose more than 1% to 5.19% while the 5-year rate to 4.58%, up by more than 1.50%, while the 10-year rate stands at 4.44%, seeing 0.80% increases.

On the other hand, investors are looking for clues regarding the next Bank of Japan (BoJ) meeting in July. Former bank official Hideo Hayakawa commented that “it is highly probable” that the bank will adjust the Yield Control Curve policy and that if they don’t, “it doesn’t make sense”. Economic data will continue modelling expectations, so traders will eye next week's Trade Balance data from Japan from June to be reported on Thursday.

GBP/JPY Levels to watch

Despite two consecutive gains days, the outlook is still negative for the pair. Indicators gained some ground but still show weakness with the Relative Strength Index (RSI) near its midline while the Moving Average Convergence Divergence (MACD) prints red bars. To confirm a recovery, the bulls must retake the 20-day Simple Moving Average (SMA) at 182.25.

Support Levels: 181.00, 180.50, 179.00.

Resistance Levels: 182.25 (20-day SMA), 182.50, 183.00.

GBP/JPY Daily chart

GBP/JPY

Overview
Today last price	181.89
Today Daily Change	0.55
Today Daily Change %	0.30
Today daily open	181.34

Trends
Daily SMA20	182.32
Daily SMA50	176.65
Daily SMA100	170.59
Daily SMA200	167.07

Levels
Previous Daily High	181.47
Previous Daily Low	179.5
Previous Weekly High	184.02
Previous Weekly Low	182.02
Previous Monthly High	183.88
Previous Monthly Low	172.67
Daily Fibonacci 38.2%	180.72
Daily Fibonacci 61.8%	180.25
Daily Pivot Point S1	180.06
Daily Pivot Point S2	178.79
Daily Pivot Point S3	178.09
Daily Pivot Point R1	182.04
Daily Pivot Point R2	182.74
Daily Pivot Point R3	184.01

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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