GBP/JPY seeks support at 181.40 as Pound retreats and Yen advances

  • GBP/JPY loses 0.70% in Monday trading, while the British pound declines.
  • Risk-off market flows are sending investors to safe havens.
  • Market concerns about an economic slowdown continue to undermine market confidence.

The pair GBP/JPY has retreated 125 points from Monday’s peak, near 182.25, as the British Pound (GBP) plummets against the safer Japanese Yen (JPY). Broad market sentiment has deteriorated at the start of the new trading week, with early gains giving way to a deep red as Monday approaches Tuesday’s session in Asian markets.

Sterling is expected to suffer with an overly cautious Bank of England (BoE) at the helm; An unexpected pause in rate hikes by the UK central bank, coupled with incredibly dovish language from several BoE officials, exposes sterling to the downside unless inflation returns sufficiently significant enough to trigger the BoE’s rate hike decision-making.

Traders hoping for inspiration from the economic agenda will have a disappointing week, with little data of interest on the agenda for both currencies.

Tankan Manufacturing Index and Outlook figures for the third quarter were released in Japan on Monday, exceeding expectations. The Tankan Manufacturing Index stood at a solid 9, well above the expected 6 and far surpassing the 5 previously recorded.

The Tankan’s manufacturing outlook also exceeded expectations, coming in at 10, far exceeding the market’s forecast of 5.

The only notable data of the week will be Thursday’s Japanese salary figures, which will be published at 23:30 GMT.

GBP/JPY Technical Outlook

Guppy’s pullback from Friday’s high near 182.80 is seeing hourly candles bounce off a short-term ascending trend line marked from last week’s low at 180.90, and bidders will attempt to gain enough momentum to make a break of the 200 hourly SMA near 181.90.

The bearish side is starting to open, and short-side pressure is building to push GBP/JPY to September lows near 180.80.

On the daily candlesticks, GBP/JPY continues to lose its nerve, wavering from the August swing high above 186.00 to trade on the bearish side of the 34-day exponential moving average (EMA) that currently sits in the 183.00.

With technical support at the 100-day SMA just south of the 181.00 zone, GBP traders will have their work cut out if they want to stop a long-term decline to the 200-day SMA well below the current price action. at 172.00.

GBP/JPY hourly chart

GBP/JPY daily chart

GBP/JPY technical levels

GBP/JPY

Overview
Latest price today 181.58
Today Daily variation -0.64
Today’s daily variation -0.35
Today’s daily opening 182.22
Trends
daily SMA20 183.09
daily SMA50 183.33
SMA100 daily 180.68
SMA200 daily 171.74
Levels
Previous daily high 183.03
Previous daily low 181.89
Previous weekly high 183.03
Previous weekly low 180.89
Previous Monthly High 185.78
Previous monthly low 180.82
Daily Fibonacci 38.2 182.59
Fibonacci 61.8% daily 182.32
Daily Pivot Point S1 181.73
Daily Pivot Point S2 181.24
Daily Pivot Point S3 180.6
Daily Pivot Point R1 182.87
Daily Pivot Point R2 183.52
Daily Pivot Point R3 184

Source: Fx Street

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