Bottom line: GBPJPY medium term outlook continues to remain bullish as prices stay above 124.00 mark. Bulls remain in complete control as they push prices above 138.00 levels with ease. It remains to be seen how they react around 139.00 resistance.
Fundamental Outlook:
USDCHF may reel under pressure and drop towards 0.9450 as NFP are expected to print another 8-10 Million. The unemployment rate set to rise to almost 20% will further add to US Dollar woes. Since the past few sessions the US Dollar has been hammered across the board, especially against the EURO, which is now trading close to 1.1350 mark.
Risk sentiment continued to soar high as SPX500 and Dow Jones are barely 10% away from their all-time highs. Investors continue to defy tensions between US and China, which deteriorated further as US blocked Chinese Airlines from American skies. It would be interesting to see if markets can continue rallying despite the factual economic damage caused due to COVID-19 pandemic.
GBPJPY has also managed to rally over 600 pips this week, trading above 138.00 as we write this article. The ongoing UK-EU Brexit talks and Japanese Yen decline as risk sentiment soars, might have played on the GBPJPY exchange rate.
Technical Analysis:
GBPJPY proposed counter trend rally gained further momentum this week as bulls managed to push prices above 138.00 mark today. The rally falls in line with our earlier discussions stating that the next move could be towards 138.00/139.00. With 139.00 approaching soon, traders might prepare to book some profits.
GBPJPY had rallied from 124.00 through 135.80 levels earlier, which was retraced as prices dropped to 129.00/50 levels. The last leg within the proposed counter trend rally was expected to reach 138.00/139.00 levels. Please note that 139.00 is close to fibonacci 0.618 retracement of the earlier drop. A bearish reaction here would bring bears back in control and GBPJPY would reverse lower again.
Alternately, a push further above the 139.00 mark would open doors towards 142.00 and threaten to break 145.00 resistance going further. We shall again review the potential move around 139.00 levels.
Prepared by
Harsh Japee, Technical Analyst.
GBPJPY Chart
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