Daily Analysis For GBP/JPY   14-06-2023

Daily Analysis For GBP/JPY 14-06-2023

GBP/JPY Analysis


Key Points: -

·       During Wednesday's Asian session, GBP/JPY experiences a retreat from a recently reached multi-year high.


·       The Japanese yen, considered a safe-haven currency, gains support from a more cautious market sentiment, leading to profit-taking on the cross.


·       The differing policy outlooks between the Bank of Japan (BoJ) and the Bank of England (BoE) contribute to limiting the downward movement as market participants await a significant release of macroeconomic data from the UK.


Today's Scenario: -


GBP/JPY remains slightly lower around the 176.70-80 level, showing limited response to UK economic data in the early morning hours in London. The currency pair is consolidating after experiencing its largest daily gain in 1.5 months and reaching the highest levels since January 2016 on the previous day.


With anticipation building ahead of the Federal Reserve's monetary policy announcements and a relatively light Asian calendar, GBP/JPY bulls take a breather during the early part of this important day. The pair's recent movements are also influenced by mixed British data and lackluster Treasury bond yields.


Regarding the UK statistics, the headline Gross Domestic Product (GDP) for April shows growth matching the previous month's figure of 0.2%, while Industrial Production declines during the same period. Both Industrial Production and the Index of Services for the three months leading up to April disappoint.


It is worth noting that previous job numbers and inflation data from the UK have raised concerns about a potentially hawkish stance from the Bank of England (BoE), which keeps buyers of the British Pound (GBP) optimistic despite the recent mixed data.


On the other hand, Japanese inflation figures have been improving recently, but officials from the Bank of Japan (BoJ) continue to defend their ultra-easy monetary policy stance. Another factor that could impact GBP/JPY is the upcoming issuance of multi-billion-dollar bonds by the US Treasury Department due to the US debt-ceiling deal.


Additionally, US 10-year Treasury bond yields retreat from a 13-day high of 3.83% to 3.80%, while the two-year yields reach their highest levels in three months at 4.70% before easing to 4.66% at the latest. This has restrained the bullish momentum of GBP/JPY.


Looking ahead, GBP/JPY may maintain its positive bias due to the divergence between the BoE and BoJ policies. However, concerns about the UK's economic transition could cause temporary volatility in the pair.


Diagram of GBP/JPY: -


Economic Events: -


Date      Event                                                                                            Impact        Currency

 02:00   (United States) API Crude Oil Stock Change                  Medium             USD

 04:15   (New Zealand) Current Account                                                  Medium NZD

 05:30   (New Zealand) Food Inflation YoY                                         Low NZD

 10:00   (Netherlands) Balance of Trade                                                          Low  EUR

 10:30   (Finland) Inflation Rate YoY                                                                 Low  EUR

 10:30   (Finland) Inflation Rate MoM                                                              Low  EUR

 10:30   (Finland) CPI                                                                                         Low     EUR

 11:30   (United Kingdom) GDP 3-Month Avg                                          Medium GBP

 11:30   (United Kingdom) Goods Trade Balance Non-EU                              High GBP

 11:30   (United Kingdom) Balance of Trade                                      Low GBP

 11:30   (United Kingdom) Construction Output YoY                       Low GBP

 11:30   (United Kingdom) Industrial Production YoY                       Low GBP

 11:30   (United Kingdom) Industrial Production MoM                            Medium             GBP

 11:30   (United Kingdom) Manufacturing Production YoY             Low GBP

 11:30   (United Kingdom) Manufacturing Production MoM    Medium            GBP

 11:30   (United Kingdom) Goods Trade Balance                                            High GBP

 11:30   (United Kingdom) GDP YoY                                                                 Low  GBP

 11:30   (United Kingdom) GDP MoM                                                             High  GBP

 11:30   (Germany) Wholesale Prices MoM                               Medium EUR

 11:30   (Germany) Wholesale Prices YoY                                  Medium EUR

 12:30   (China) FDI (YTD) YoY                                                                   Medium   CNY

 12:30   (Slovakia) Inflation Rate MoM                                                            Low  EUR

 12:30   (Slovakia) Inflation Rate YoY                                                                Low  EUR

 12:30   (Slovakia) Core Inflation Rate MoM                                      Low EUR

 12:30   (Slovakia) Core Inflation Rate YoY                                        Low EUR

 12:30   (Slovakia) CPI                                                                                      Low      EUR

 13:30   (France) IEA Oil Market Report                                                   Medium  EUR

 14:30   (Euro Area) Industrial Production MoM                                     Medium EUR

 14:30   (Euro Area) Industrial Production YoY                                              Low  EUR

 14:30   (Montenegro) GDP Growth Rate YoY                                                Low  EUR

 15:00   (Germany) 10-Year Bund Auction                               Medium  EUR

 15:30   (Portugal) Inflation Rate MoM                                                          Low    EUR

 15:30   (Portugal) Inflation Rate YoY                                                             Low    EUR

 15:30   (Portugal) CPI                                                                                     Low       EUR

 15:30   (Ireland) Residential Property Prices YoY                                          Low  EUR

 15:30   (Ireland) Residential Property Prices MoM                       Low EUR

 16:30   (United States) MBA 30-Year Mortgage Rate                Medium USD

 16:30   (United States) MBA Mortgage Applications                      Low USD

 16:30   (United States) MBA Mortgage Refinance Index                              Low USD

 16:30   (United States) MBA Mortgage Market Index                                  Low USD

 16:30   (United States) MBA Purchase Index                                                 Low  USD

 17:00   (United Kingdom) NIESR Monthly GDP Tracker                               Low GBP

 18:00   (Canada) New Motor Vehicle Sales                                     Low  CAD

 18:00   (United States) Core PPI MoM                                                  Medium    USD

 18:00   (United States) Core PPI YoY                                                             Low    USD

 18:00   (United States) PPI YoY                                                                      Low     USD

 18:00   (United States) PPI MoM                                                     High  USD

 20:00   (United States) EIA Heating Oil Stocks Change                                  Low USD

 20:00   (United States) EIA Refinery Crude Runs Change                              Low USD

 20:00   (United States) EIA Crude Oil Stocks Change               Medium USD

 20:00   (United States) EIA Distillate Stocks Change                      Low USD

 20:00   (United States) EIA Gasoline Production Change                             Low USD

 20:00   (United States) EIA Crude Oil Imports Change                                 Low USD

 20:00   (United States) EIA Gasoline Stocks Change                Medium USD

 20:00   (United States) EIA Cushing Crude Oil Stocks Change         Low              USD

 20:00   (United States) EIA Distillate Fuel Production Change         Low              USD

 21:00   (United States) 17-Week Bill Auction                                                 Low USD

 23:30   (United States) Fed Interest Rate Decision                          High              USD

 23:30   (United States) FOMC Economic Projections                        High              USD

 23:30   (United States) Interest Rate Projection - 1st Yr                           Medium            USD

 23:30   (United States) Interest Rate Projection - 2nd Yr                         Medium            USD

 23:30   (United States) Interest Rate Projection - Current        Medium            USD

 23:30   (United States) Interest Rate Projection - Longer                        Medium             USD


Buy Scenario: -


From a technical perspective, the short-term outlook for GBP/JPY remains bullish. However, certain indicators have reached overbought levels, suggesting a potential downward correction as the cross continues to trade at multi-year highs since mid-May. The Relative Strength Index (RSI) has risen above 70.00, indicating overbought conditions, and the Moving Average Convergence Divergence (MACD) remains in positive territory.


If GBP/JPY manages to break above the 176.80 area, it could lead to a more significant upward move towards the psychological level of 177.00 and the zone around 177.50. Till we do not advise to buy GBP/JPY.


Sell Scenario: -


On the downside, if the cross undergoes a correction, support levels are located around the 174.50 area and below the psychological level of 174.00, with additional support near the 20-day Simple Moving Average (SMA) at 173.40. Till we do not advise to sell GBP/JPY.


Support and Resistance Level: -

Support          Resistance  

S1 175.24   -  R1 177.65

S2 173.65  -   R2 178.46

S3 172.84  -   R3 180.05


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