GBP/JPY upward move capped around 157.70 despite a risk-on market sentiment

GBP/JPY rises for the second day in a row amid risk-on market sentiment.
Bank of England hiking rate expectations for the November 4 meeting, shed by 50%, but fully priced in for December meeting,
GBP/JYP: From a technical perspective, there is room for another leg-up as RSI is still short of overbought levels.

Christian Borjon Valencia FXStreet

The GBP/JPY cross-currency pair advances during the New York session, up 0.38%, trading at 157.15 at the time of writing.

Investors’ mood is upbeat, portrayed by rising US equity indices, rising between 0.19% and 0.36%. Factors like Q3 solid US corporate earnings calm market participants, despite elevated inflation and central bank tightening monetary policy. Furthermore, the risk-on environment undermined the safe-haven Japanese yen status, as it remains the laggard of the session, losing 0.39% during the day against most G8 currencies.

Cable has remained well supported by Bank of England hawkish members, like Governor Andrew Bailey and Chief Economist Huw Pill. They expressed concerns about high inflation, supporting the thesis of tackling inflation before it gets out of control. Nevertheless, on Monday, Silvana Tenreyro, an external member of the Boe, said that inflation pressures from surging energy prices were likely to fade quickly.

According to Brown Brother Harriman (BBH analysts, on a note to clients, expectations of a Bank of England (BoE) rate hike by the November 4 meeting are getting trimmed.
“WIRP suggests only 50% odds of liftoff November 4, down from being fully priced in at the start of last week. However, a hike at the next meeting on December 16 remains fully priced in,” per BBH report.

On Monday, on the Brexit front, David Frost said that EU proposals would not offer a more profound solution as the UK wants. Further added, “The problem with the EU proposals on Northern Ireland is that they don’t go far enough.”

That said, GBP/JPY traders will look for market mood sentiment and ongoing developments surrounding the UK. The Bank of England November 4 monetary policy seems priced in, as the cross-currency has rallied almost 6% in the MTD, from 150.00 to 158.00 tops.

GBP/JPY Price Forecast: Technical outlook

Daily chart

The GBP/JPY is trading near last Friday’s tops around 157.20’s, taking a breather after a steep upside move of 800 pips without consolidation. The daily moving averages (DMA’s) are below the spot price, supporting the upward bias, while the Relative Strength Index (RSI) at 67 aims higher, opening the door for another leg-up, potentially towards 158.00.

GBP/JPY ADDITIONAL LEVELS

Overview
Today last price	157.15
Today Daily Change	0.58
Today Daily Change %	0.37
Today daily open	156.57

Trends
Daily SMA20	153.95
Daily SMA50	152.26
Daily SMA100	152.6
Daily SMA200	151.28

Levels
Previous Daily High	156.82
Previous Daily Low	156.02
Previous Weekly High	158.22
Previous Weekly Low	155.93
Previous Monthly High	152.85
Previous Monthly Low	148.96
Daily Fibonacci 38.2%	156.52
Daily Fibonacci 61.8%	156.33
Daily Pivot Point S1	156.12
Daily Pivot Point S2	155.67
Daily Pivot Point S3	155.32
Daily Pivot Point R1	156.92
Daily Pivot Point R2	157.27
Daily Pivot Point R3	157.72

Author

Christian Borjon Valencia

FXStreet

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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