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Market Analysis

Home » Technical Analysis » Daily » GBPJPY – Looking To Buy British Pound?

GBPJPY – Looking To Buy British Pound?

Posted by FXTimes in Daily - May 17th, 2016 12:54 pm GMT

British Pound GBPUSD GBPCHF

Key Points

  • The British Pound surged higher vs the Japanese yen recently before it found sellers near 159.00.
  • There is a resistance trend line formed on the hourly chart of the GBPJPY pair, which is acting as a hurdle for more gains.
  • In the UK, the Consumer Price Index released by the National Statistics posted a rise of 0.3% in April 2016, less than the forecast of 0.5%.
  • In terms of the monthly change, the UK Consumer Price Index increased 0.1%, which was again less than the forecast.

Technical Analysis

The British Pound was seen trading higher vs the Japanese yen before the UK Consumer Price Index. However, after the report was released, there was a downside reaction in the GBPJPY pair.

GBPJPY

There is also a resistance trend line formed on the hourly chart of the GBPJPY pair, which prevented the upside move in the short term.

It looks like the pair may trade down towards the 38.2% Fib retracement level of the last wave from the 155.67 low to 158.98 high.

UK CPI

In 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 forecast was slated for an increase of 0.5% in the PPI in April 2016, compared with the same month a year ago. However, the result was disappointing, as the CPI rose only 0.3%.

When we look at the monthly change, then the UK CPI rose 0.1%, which was again less than the forecast. According to the report, “the downward pressures were partially offset by rising prices for motor fuels and for certain recreational goods and cultural services, and by food prices, which were unchanged between March and April 2016, having fallen between the same two months a year ago.”

Overall, the British Pound due to the bad CPI report may trade lower in the near term vs the Japanese yen before it can find bids.

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