Against the wall, that's how the Great British Pound traded for the last couple days. The GBP/JPY cannot picture a different behavior and faces major selling pressure as it lost control for a second-consecutive day on the 141.00 round figure mark.
Mixed Data, Hard-Brexit, Trump’s Speech
David Cheetham, Market Analyst at XTB UK, shared his views on the UK mixed data, “Despite a better than expected reading for manufacturing production and the industrial equivalent, the pound has continued its descent today and is looking precipitous. Both these economic indicators came in above expectations, but a decline in construction output and in particular the drop in the goods trade balance figure have caused concern for pound traders.”
“Mark Carney is scheduled to testify before the Parliament’s Treasury Select Committee this afternoon and the Governor of the BoE has been coming under a fair amount of criticism lately for his decision to aggressively ease policy following the Brexit vote.”
Furthermore, PM May's endless game with the media about what matters or not for the UK during the "exit" talks continues to deteriorate any sterling recovery in the near-term.
However, there is light in the darkness, like it or not Trump's speech might give a break to all GBP crosses; how that happens? If his ferocity hits the tape and wakes up risk takers (including yield hunters), then without further questions nor tangibles the pound can score a decent short-term bottom.
GBP/JPY Technical Levels
This is where things get tricky for this currency cross in the medium-term view. From current levels, on the 140.20 handle, we find the last stand to protect this bunker, which if broken has the potential to drag the pound back towards the 136.00/135.40 range. On the flip side, near its 50 SMA, buyers need some serious commitment to pull out another miracle and close above the 142.00 psychological level to guarantee a healthy recovery.
Turning to the long-term picture, without any positive response in the next 48 hours, the cross can easily slide towards the 139.40 handle (short-term 61.8% Fib), if things get ugly, the support 136.80 (short-term 50.0% Fib) makes sense to adjust positions.To the upside, when things get cleared, there is enough time and a higher low in place to target 152.10 (long-term 38.2% Fib) and a continuation towards 168.90 (long-term 61.8% Fib).