Daily Analysis For GBP/JPY   22-05-2023

Daily Analysis For GBP/JPY 22-05-2023

GBP/JPY Analysis
Economic Events and Scenario for GBP/JPY
Economic Events : -
00:50(Japan) Machinery Orders YoYMediumJPY
00:50(Japan) Machinery Orders MoMMediumJPY
01:00(Canada) Victoria DayNoneCAD
01:00(Montenegro) Independence DayNoneEUR
02:15(China) Loan Prime Rate 1YMediumCNY
02:15(China) Loan Prime Rate 5YMediumCNY
05:30(Netherlands) Consumer ConfidenceMediumEUR
06:00(Estonia) PPI YoYLowEUR
06:00(Estonia) PPI MoMLowEUR
07:30(Switzerland) Industrial Production YoYMediumCHF
08:00(Slovakia) Current AccountLowEUR
09:00(Greece) Current AccountLowEUR
09:00(Australia) Myfxbook AUDUSD SentimentMediumAUD
09:00(Switzerland) Myfxbook USDCHF SentimentMediumCHF
09:00(Japan) Myfxbook USDJPY SentimentMediumJPY
09:00(European Union) Myfxbook EURUSD SentimentMediumEUR
09:00(United Kingdom) Myfxbook GBPUSD SentimentMediumGBP
09:00(Canada) Myfxbook USDCAD SentimentMediumCAD
09:00(New Zealand) Myfxbook NZDUSD SentimentMediumNZD
10:00(Belgium) Consumer ConfidenceLowEUR
10:00(Euro Area) Construction Output YoYLowEUR
10:45(European Union) EU Bond AuctionLowEUR
11:00(Ireland) Wholesale Prices MoMLowEUR
11:00(Ireland) Wholesale Prices YoYLowEUR
11:00(Luxembourg) Unemployment RateLowEUR
11:30(Portugal) Current AccountLowEUR
13:00(Kosovo) Balance of TradeLowEUR
13:30(United States) Fed Bullard SpeechMediumUSD
14:00(France) 3-Month BTF AuctionLowEUR
14:00(France) 12-Month BTF AuctionLowEUR
14:00(France) 6-Month BTF AuctionLowEUR
15:00(Euro Area) Consumer ConfidenceMediumEUR
15:50(United States) Fed Barkin SpeechMediumUSD
15:50(United States) Fed Bostic SpeechMediumUSD
16:30(United States) 3-Month Bill AuctionLowUSD
16:30(United States) 6-Month Bill AuctionLowUSD
20:00(El Salvador) Balance of TradeLowUSD

Today's Scenario: - The GBP/JPY pair is exhibiting a volatile and unpredictable movement within a narrow range above 171.40 during the early European session. The market sentiment is mixed regarding potential future interest rate hikes by the Bank of England (BoE), contributing to the heightened volatility.
Despite consistent interest rate increases by BoE Governor Andrew Bailey, which have pushed rates to 4.50%, inflationary pressures in the UK economy have not shown signs of easing from the double-digit territory.
In contrast, the Bank of Japan (BoJ) is expected to maintain an ultra-dovish stance on its interest rate policy. BoJ Governor Kazuo Ueda predicts that Japan's inflation is likely to decline below 2% in the middle of the current fiscal year.

Buy Scenario: - On the upside, a strong upward move above the high of the previous week at 172.33 would support the pair in reaching a fresh seven-year high of 173.00, followed by the high of January 25, 2016, at 174.18. Till we do not advise to buy GBP/JPY.

Sell Scenario: - GBP/JPY has encountered significant resistance near the crucial level derived from the May 2 high at 172.33 on the two-hour chart. The currency pair is currently consolidating, forming a contraction pattern that is expected to lead to a breakout and a substantial move.
The price of the pair is currently hovering around the 20-period Exponential Moving Average (EMA) at 171.67, indicating a sideways trend.
Meanwhile, the Relative Strength Index (RSI) (14) has shifted into the range of 40.00-60.00, moving away from the previous bullish range of 60.00-80.00. This suggests a loss of upside momentum.
If the pair breaks below the low of May 18 at 171.25, it is likely to decline further towards the May 9 low at 169.85. A breach below this level could potentially lead to a drop towards the May 3 low around 169.14. Till we do not advise to sell GBP/JPY.

Support and Resistance Level: -
S1 171.10-R1 172.36
S2 170.55-R2 173.07
S3 169.84-R3 173.62


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