- The British Pound remained in a downtrend versus the Japanese yen and may continue to trade lower.
- There is a support trend line formed on the hourly chart of the GBPJPY pair, which prevents losses every time there is a decline.
- In the UK today, the Consumer Price Index was released by the National Statistics.
- There was a decline of 0.1% in the CPI in July 2016, compared with the previous month.
The British Pound traded lower recently against the Japanese yen before finding bids near a support trend line formed on the hourly chart of the GBPJPY pair. It is currently recovering but remains below the 21 hourly simple moving average.
On the upside, the 38.2% fib retracement level of the last drop from the 132.50 high to 129.33 low is also acting as a barrier for a recovery.
It looks like a recovery in the pair won’t be easy as long as the pair is below the 21 hourly SMA.
Earlier today, the UK Consumer Price Index, which is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services was released by the National Statistics.
The market was expecting a decline of 0.1% in the CPI in July 2016, compared with the previous month, and the result was the same. In terms of the yearly change, the Consumer Price Index rose 0.6%, more than the forecast of 0.5%. The report added that “The main contributors to the increase in the rate were rising prices for motor fuels, alcoholic beverages and accommodation services, and a smaller fall in food prices than a year ago. These upward pressures were partially offset by falls in social housing rent, and falling prices for certain games and toys“.
Overall, the GBPJPY pair may recover a few pips in the near term, but as long as it is below the 21 hourly SMA, it may head lower.