Daily Analysis For GBP/JPY   19-05-2023

Daily Analysis For GBP/JPY 19-05-2023

GBP/JPY Analysis
Economic Events and Scenario for GBP/JPY
Economic Events : -
00:01(United Kingdom) Gfk Consumer ConfidenceHighGBP
00:30(Japan) Core Inflation Rate YoYMediumJPY
00:30(Japan) Inflation Rate MoMLowJPY
00:30(Japan) Inflation Rate YoYHighJPY
00:30(Japan) Inflation Rate Ex-Food and Energy YoYLowJPY
01:00(Belgium) Friday after Ascension DayNoneEUR
04:00(New Zealand) Credit Card Spending YoYLowNZD
04:35(Japan) 3-Month Bill AuctionLowJPY
05:30(Japan) Tertiary Industry Index MoMLowJPY
07:00(Germany) PPI YoYLowEUR
07:00(Germany) PPI MoMMediumEUR
08:00(Slovakia) Current AccountLowEUR
09:00(Greece) Current AccountLowEUR
09:00(Italy) Construction Output YoYLowEUR
09:30(Slovenia) PPI YoYLowEUR
10:00(Slovakia) Unemployment RateLowEUR
11:00(Spain) Consumer ConfidenceMediumEUR
12:00(Montenegro) Current AccountLowEUR
13:30(Canada) Retail Sales YoYHighCAD
13:30(Canada) Retail Sales Ex Autos MoMHighCAD
13:30(Canada) Retail Sales MoMHighCAD
13:45(United States) Fed Williams SpeechMediumUSD
14:00(United States) Fed Bowman SpeechMediumUSD
15:55(Euro Area) ECB Schnabel SpeechMediumEUR
16:00(United States) Fed Chair Powell SpeechHighUSD
18:00(United States) Baker Hughes Oil Rig CountLowUSD
18:00(United States) Baker Hughes Total Rig CountLowUSD
20:00(Euro Area) ECB President Lagarde SpeechMediumEUR

Today's Scenario: - During the Asian session, the GBP/JPY pair experienced a significant decline after being unable to sustain levels above the immediate resistance of 172.00. This drop in the cross was a result of selling pressure triggered by higher-than-expected inflation data reported by the Statistics Bureau of Japan for the month of April.
The national headline Consumer Price Index (CPI) surged to 3.5%, surpassing the previous reading of 3.2%. Market expectations, on the other hand, were for a deceleration to 2.5%. Furthermore, the Core CPI, which excludes food and energy prices, accelerated to 4.1%, exceeding the consensus of 3.4% and the previous release of 3.8%.

Buy Scenario: - The GBP/JPY pair has shown an upward bias on the daily chart, although it has yet to test the year-to-date (YTD) high, which could potentially lead to further gains. However, it's worth noting that the Relative Strength Index (RSI) indicator is displaying lower peaks, in contrast to the GBP/JPY's price action, which is reaching higher highs. This negative divergence between price and oscillators suggests the possibility of upcoming losses.
Moreover, there are indications that the GBP/JPY might be forming a double top pattern, which would be confirmed if the pair breaks below the May 11 daily low of 167.84.
In the event that the GBP/JPY surpasses the YTD high, the next resistance levels to watch would be 173.00, followed by the psychological barrier of 175.00. Breaking above the latter would clear the path for testing the 2016 high at 177.87. Till we do not advise to buy GBP/JPY.

Sell Scenario: - On the contrary, if the GBP/JPY falls below the level of 172.00, it could trigger a correction. Initially, the pair may decline towards the May 16 high at 170.83. Once that level is breached, the next support area would be around the 170.00 mark, followed by the confluence of the falling wedge top trendline and the 20-day Exponential Moving Average (EMA) in the range of 169.50-169.70. Till we do not advise to sell GBP/JPY.

Support and Resistance Level: -
S1 171.48-R1 172.46
S2 170.85-R2 172.80
S3 170.51-R3 173.43


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