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GBP/JPY continues to weaken, showing a clear sell signal amid GBP pressure
Forex
Summary:
The British pound (GBP) continued to be under pressure due to poor economic data from the UK and optimism towards the Japanese yen (JPY) as investors sought safe-haven assets...
Sell
CLOSEDGBPJPY
End Time
196.450
Entry Price
195.800
TP
197.000
SL
193.708 -0.840 -0.43%
650
Points
Profit
195.800
TP
195.696
CLOSING
196.450
Entry Price
197.000
SL
GBP/JPY continued to trade lower today as fundamentals and technicals weighed on the GBP. UK inflation data showed that CPI rose by 3.9% year-on-year in October, below market expectations of 4.1%. This dampened expectations that the Bank of England (BoE) would continue to raise interest rates at its upcoming meetings.
In contrast, the JPY benefited from growth in Japanese exports, with data showing exports rose 6.3% in October, beating expectations of 4.9%. This backdrop has investors favoring the JPY, especially as global risk indicators rise amid concerns about economic and geopolitical uncertainty.
Market psychology
Market sentiment is shifting towards safe-haven assets, with the Japanese yen being the top choice. This is reflected in capital outflows from riskier assets such as the pound. Investors are cautious about the global economic outlook, especially as the UK faces the risk of a recession due to slowing GDP growth and weak domestic consumption.
GBP options contracts show investors are increasing their short positions on the pound, while JPY continues to be bought strongly, indicating long-term optimism for the currency, according to a report from CME Group.
Technical analysis
On the H1 chart of GBP/JPY, technical signals show a dominant downtrend:
Stochastic (5,3,3): The %K line crosses below the %D line and is currently in the neutral zone (level 27.37), indicating that selling pressure is still dominant.
Bollinger Bands: Price has left the upper band and is approaching the moving average. The narrowing of the Bollinger bands signals the possibility of a further price decline.
Ichimoku Kinko Hyo: Price has broken below the Kumo cloud, confirming a strong downtrend. The Tenkan-Sen line has also broken below the Kijun-Sen, reinforcing the sell signal.
Resistance and Support: The nearest support level is at 195.83, while the current strong resistance is at 197.22. If this support is broken, the next price target could be 195.00.
Trading Recommendations
Based on fundamentals and technicals, the current GBP/JPY trading strategy is SELL , with specific levels as follows:
Entry: 196.450, when price holds below resistance at 196.80.
Take Profit: 195.80, expecting the price to continue to fall further.
Stop Loss: 197.00, to protect capital in case price increases again.
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