GBP/JPY threatens the 20-day SMA as the Yen gains ground

The GBP/JPY cross tallies a second consecutive day of losses, falling below the 182.50 area on Friday.
The 20-day SMA at 181.44 is poised for a retest.
The Yen gained ground agains most of its rivals on rising Japanese Yields after Labor Cash Earning data.

Patricio Martín FXStreet

On Friday, the GBP/JPY cross lost ground as the JPY trades with agains most of its rivals, including the USD, EUR,GBP and AUD. In that sense, the USD/JPY fell to a two-week low following US Nonfarm Payrolls data pressured down by falling American yields while the Japanese rates are rising.

In that sense, the yield on the 2,5 and 10-year Japanese bonds rose to their highest level since May. On the other hand, after Nonfarm Payrolls from the US from June came in lower than expected at 209K vs the 225k expected, US yields retreated. A 1.70% decrease was seen in the 2-year yield, bringing it down to 4.90%, whereas the rates for the 5-year and 10-year yields dropped to 4.29% and 4.02%, respectively.

In that sense, strong Labor Cash Earnings data from Japan released early in the Asian session seem to have fueled the rise in Japanese yields. In that sense, the average income, before taxes, per regular employee in the Asian country rose by 2.5% YoY in May vs the 0.7% expected by the markets. It is worth noticing that the Bank of Japan (BoJ) expressed that its short-term objective was to see wage growth and rising economic activity. That being said, the expectations of a pivot in monetary policy by the BoJ, may continue to strengthen the JPY.

On the British side, their economic calendar had nothing relevant to offer. The focus is next Tuesday’s labour market data, including Claimant Count and Average Earnings figures.

GBP/JPY Levels to watch

The daily chart, suggest a bearish outlook for the short term. Indicators are starting to show weakess with the Relative Strength Index (RSI) pointing south and the Moving Average Convergence Divergence, printing higher red bars. On the bigger picture, the outlook will favour the GBP as long as the cross holds above its main Simple Moving Averages of 20,100, and 200 days.

Support Levels: 181.45 (20-day SMA), 181.00 and 180.50.
Resistance Levels: 182.70, 183.00,184.00.

GBP/JPY Daily chart

GBP/JPY

Overview
Today last price	182.51
Today Daily Change	-1.04
Today Daily Change %	-0.57
Today daily open	183.55

Trends
Daily SMA20	181.15
Daily SMA50	175.53
Daily SMA100	169.63
Daily SMA200	166.62

Levels
Previous Daily High	184.01
Previous Daily Low	182.5
Previous Weekly High	183.88
Previous Weekly Low	181.69
Previous Monthly High	183.88
Previous Monthly Low	172.67
Daily Fibonacci 38.2%	183.08
Daily Fibonacci 61.8%	183.44
Daily Pivot Point S1	182.7
Daily Pivot Point S2	181.85
Daily Pivot Point S3	181.19
Daily Pivot Point R1	184.21
Daily Pivot Point R2	184.86
Daily Pivot Point R3	185.71

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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