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Jun 09 - 02:55 AM

GBP/JPY - COMMENT-Brave Call But GBP/JPY Looks Overdone

By Peter Stoneham  —  Jun 09 - 01:35 AM

Sterling has appreciated 8.5% against the Japanese yen since May 12 and the steep climb is looking overdone.
The Bank of Japan's outlier position versus other leading central banks has been blamed for the yen's broad based decline.

A strong dollar and Abenomics-style policy has hurt the yen and the Japanese authorities are sticking to their foreign exchange stance even as the currency slides. nL1N2XV04PnL1N2XV0B5

If our correction call is to play out the pullback will have to come from the sterling side and the pound is experiencing weakness on UK political uncertainty.

The cross hit a 2022 high of 168.72 earlier Thursday.
If the high holds, Fibonacci readings off the 155.58 to 168.72 climb give a minimum correction of 165.62.
If that adjustment takes hold a drop to the 38.2% and 50% retracement levels at 163.44 and 161.94 is possible.

However, given the yen's backdrop and the authorities' reluctance to take official action to support the currency, any adjustment in GBP/JPY is likely to be short-lived, merely providing better levels to join the bull trend.

For more click on FXBUZ


GBP/JPY daily candle chart: Click here

Source:
Refinitiv IFR Research/Market Commentary

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