Daily Analysis For GBP/JPY   16-06-2023

Daily Analysis For GBP/JPY 16-06-2023

GBP/JPY Analysis


Key Points: -

·       GBP/JPY sees some buying interest on Friday and reaches a new multi-year high.


·       The Bank of Japan's decision to maintain its current policy stance weighs on the Japanese Yen and provides support for the GBP/JPY cross.


·       The market's expectations for additional rate hikes by the Bank of England (BoE) also bolster the British Pound and contribute to the upward movement of the pair.


Today's Scenario: -


The GBP/JPY cross reversed a dip during the Asian session and surged to its highest level since December 2015 following the Bank of Japan's (BoJ) policy announcement. As widely expected, the BoJ maintained its accommodative policy stance without making any changes. The Japanese Yen (JPY) weakened due to reduced expectations of government intervention to stabilize the currency and a positive sentiment in equity markets. These factors contributed to dip-buying in GBP/JPY.


The British Pound (GBP) continued to receive support as market participants anticipate further interest rate hikes by the Bank of England (BoE). Inflation in the UK remains high, well above the 2% target, with expectations of another 25 basis point increase on June 22. There is also growing speculation that interest rates may peak at 5.5% later this year. These expectations act as a tailwind for the GBP/JPY cross.


However, the daily Relative Strength Index (RSI) is indicating overbought conditions, which could limit fresh bullish bets on GBP/JPY. Traders may wait for further cues, including comments from BoJ Governor Kazuo Ueda, for new market direction. Despite potential caution, the cross is on track to record significant weekly gains and appears poised to continue its upward trend observed over the past five weeks.


Diagram of GBP/JPY: -


Economic Events: -


Date      Event                                                                                                           Impact         Currency

 01:30   (United States) Foreign Bond Investment                                        Low  USD

 01:30   (United States) Net Long-term TIC Flows                                                 Medium   USD

 01:30   (United States) Overall Net Capital Flows                                         Low  USD

 04:00   (New Zealand) Business NZ PMI                                                              Medium     NZD

 08:30   (Japan) BoJ Interest Rate Decision                                                   High    JPY

 12:30   (Austria) Inflation Rate MoM                                                                           Low     EUR

 12:30   (Austria) Inflation Rate YoY                                                                              Low     EUR

 12:30   (Austria) Harmonised Inflation Rate YoY                                                         Low    EUR

 12:30   (Austria) Harmonised Inflation Rate MoM                                       Low  EUR

 12:30   (Austria) CPI                                                                                                     High        EUR

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

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

 12:30   (United States) Fed Bullard Speech                                            Medium   USD

 13:30   (European Union) ECOFIN Meeting                                            Medium   EUR

 13:30   (Italy) Inflation Rate YoY                                                                           Medium      EUR

 13:30   (Italy) Harmonised Inflation Rate MoM                                                          Low    EUR

 13:30   (Italy) Harmonised Inflation Rate YoY                                                             Low    EUR

 13:30   (Italy) Inflation Rate MoM                                                                  Low     EUR

 13:30   (Italy) CPI                                                                                                           High       EUR

 14:30   (Euro Area) Inflation Rate MoM                                                                      Low     EUR

 14:30   (Euro Area) Core Inflation Rate YoY                                                   Low    EUR

 14:30   (Euro Area) Inflation Rate YoY                                                                   Medium    EUR

 14:30   (Euro Area) Labour Cost Index YoY                                                    Low   EUR

 14:30   (Euro Area) Wage Growth YoY                                                                         Low     EUR

 14:30   (Euro Area) CPI                                                                                                 High       EUR

 14:30   (Malta) Inflation Rate YoY                                                                  Low     EUR

 15:30   (Portugal) PPI YoY                                                                                             Low       EUR

 15:30   (Portugal) PPI MoM                                                                                         Low       EUR

 17:15   (United States) Fed Waller Speech                                            Medium   USD

 18:00   (Canada) Foreign Securities Purchases                                                            Low   CAD

 18:00   (Canada) Foreign Securities Purchases by Canadians                       Low CAD

 18:00   (Canada) Wholesale Sales MoM                                                                      Low     CAD

 19:30   (United States) Michigan Consumer Sentiment                                              High USD

 19:30   (United States) Michigan Inflation Expectations                                             Low  USD

 19:30   (United States) Michigan Current Conditions                                     Low  USD

 19:30   (United States) Michigan 5 Year Inflation Expectations                                 Low USD

 19:30   (United States) Michigan Consumer Expectations                           Low USD

 22:30   (United States) Baker Hughes Oil Rig Count                                     Low  USD

 22:30   (United States) Baker Hughes Total Rig Count                                                Low  USD


Buy Scenario: -


According to the daily chart, the GBP/JPY has a bullish outlook for the short term. However, it is worth noting that the cross is currently trading at multi-year highs and the Relative Strength Index (RSI) indicates overbought conditions. This suggests that a healthy downward correction could be in store.


If the pair continues its upward momentum, it may encounter resistance around the 179.50 level, followed by the psychological level at 180.00 and the 180.50 zone. Till we do not advise to buy GBP/JPY.


Sell Scenario: -


On the downside, if the pair undergoes a correction, immediate support levels can be found around the 177.40 area. Further support lies at the psychological level of 175.00 and the 20-day Simple Moving Average (SMA) at 174.05. Traders should monitor price action and indicators closely to gauge the strength of the trend and potential reversal signals. Till we do not advise to sell GBP/JPY.


Support and Resistance Level: -

Support          Resistance  

S1 177.97   -  R1 180.11

S2 176.55  -   R2 180.82

S3 175.83  -   R3 182.24


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