Published on May 19, 2023

Daily Analysis For GBP/JPY 19-05-2023

GBP/JPY Analysis

Economic Events and Scenario for GBP/JPY

Economic Events : -

GMT	Event	Impact	Currency
00:01	(United Kingdom) Gfk Consumer Confidence	High	GBP
00:30	(Japan) Core Inflation Rate YoY	Medium	JPY
00:30	(Japan) Inflation Rate MoM	Low	JPY
00:30	(Japan) Inflation Rate YoY	High	JPY
00:30	(Japan) Inflation Rate Ex-Food and Energy YoY	Low	JPY
01:00	(Belgium) Friday after Ascension Day	None	EUR
04:00	(New Zealand) Credit Card Spending YoY	Low	NZD
04:35	(Japan) 3-Month Bill Auction	Low	JPY
05:30	(Japan) Tertiary Industry Index MoM	Low	JPY
07:00	(Germany) PPI YoY	Low	EUR
07:00	(Germany) PPI MoM	Medium	EUR
08:00	(Slovakia) Current Account	Low	EUR
09:00	(Greece) Current Account	Low	EUR
09:00	(Italy) Construction Output YoY	Low	EUR
09:30	(Slovenia) PPI YoY	Low	EUR
10:00	(Slovakia) Unemployment Rate	Low	EUR
11:00	(Spain) Consumer Confidence	Medium	EUR
12:00	(Montenegro) Current Account	Low	EUR
13:30	(Canada) Retail Sales YoY	High	CAD
13:30	(Canada) Retail Sales Ex Autos MoM	High	CAD
13:30	(Canada) Retail Sales MoM	High	CAD
13:45	(United States) Fed Williams Speech	Medium	USD
14:00	(United States) Fed Bowman Speech	Medium	USD
15:55	(Euro Area) ECB Schnabel Speech	Medium	EUR
16:00	(United States) Fed Chair Powell Speech	High	USD
18:00	(United States) Baker Hughes Oil Rig Count	Low	USD
18:00	(United States) Baker Hughes Total Rig Count	Low	USD
20:00	(Euro Area) ECB President Lagarde Speech	Medium	EUR

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: -