Bottom line: GBPJPY medium to long term structure remains bullish against 124.00 lows. The intermediary corrective drop seems to be complete around 129.55 levels, and the currency could be on its way towards 138.00/139.00 levels, going forward.
Fundamental Outlook:
GBPJPY is has slipped lower by 100 pips from recent swing highs at 132.56. The Bank of Japan rate decision is scheduled to be out today at 11:00 PM EST, less than an hour from now. With risk assets witnessing a rally this entire week, the Japanese Yen has come under pressure and GBPJPY has rallied from last week lows around 129.55.
USDCHF had rebound yesterday from around 0.9640 and rallied past 0.9700 mark. The US Dollar strength could be short lived and the currency exchange rate may soon come under pressure, as fears of U.S recession looms large.
Over 30 million US citizens have now lost their jobs since COVID-19 pandemic broke out and the figures are increasing week after week. The US GDP forecast for the Second Quarter 2020, has deteriorated further and may print up to -30%. The US Dollar as a safe haven may gain, as the economy faces its worst recession since The Great Depression.
Technical Analysis:
GBPJPY might have completed its corrective drop last week around 129.50 levels. Bulls have managed to print recent swing highs around 132.56 levels before pulling back. We can expect the currency pair to rally towards 138.00/139.00 levels as bulls seem to be back in control.
GBPJPY had earlier rallied from 124.00 through 135.75 levels. We were expecting a corrective drop towards 129.00/130.00 levels before the next rally could begin. GBPJPY has managed to print lows at 129.55, which is fibonacci 50% retracement of previous rally.
Traders might have initiated fresh long positions around 129.50 levels, with protective stops below 124.00 and projected targets above 138.00/139.00 respectively.
Prepared by
Harsh Japee, Technical Analyst.
GBPJPY Chart
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