Published on May 22, 2023

Daily Analysis For GBP/JPY 22-05-2023

GBP/JPY Analysis

Economic Events and Scenario for GBP/JPY

Economic Events : -

GMT	Event	Impact	Currency
00:50	(Japan) Machinery Orders YoY	Medium	JPY
00:50	(Japan) Machinery Orders MoM	Medium	JPY
01:00	(Canada) Victoria Day	None	CAD
01:00	(Montenegro) Independence Day	None	EUR
02:15	(China) Loan Prime Rate 1Y	Medium	CNY
02:15	(China) Loan Prime Rate 5Y	Medium	CNY
05:30	(Netherlands) Consumer Confidence	Medium	EUR
06:00	(Estonia) PPI YoY	Low	EUR
06:00	(Estonia) PPI MoM	Low	EUR
07:30	(Switzerland) Industrial Production YoY	Medium	CHF
08:00	(Slovakia) Current Account	Low	EUR
09:00	(Greece) Current Account	Low	EUR
09:00	(Australia) Myfxbook AUDUSD Sentiment	Medium	AUD
09:00	(Switzerland) Myfxbook USDCHF Sentiment	Medium	CHF
09:00	(Japan) Myfxbook USDJPY Sentiment	Medium	JPY
09:00	(European Union) Myfxbook EURUSD Sentiment	Medium	EUR
09:00	(United Kingdom) Myfxbook GBPUSD Sentiment	Medium	GBP
09:00	(Canada) Myfxbook USDCAD Sentiment	Medium	CAD
09:00	(New Zealand) Myfxbook NZDUSD Sentiment	Medium	NZD
10:00	(Belgium) Consumer Confidence	Low	EUR
10:00	(Euro Area) Construction Output YoY	Low	EUR
10:45	(European Union) EU Bond Auction	Low	EUR
11:00	(Ireland) Wholesale Prices MoM	Low	EUR
11:00	(Ireland) Wholesale Prices YoY	Low	EUR
11:00	(Luxembourg) Unemployment Rate	Low	EUR
11:30	(Portugal) Current Account	Low	EUR
13:00	(Kosovo) Balance of Trade	Low	EUR
13:30	(United States) Fed Bullard Speech	Medium	USD
14:00	(France) 3-Month BTF Auction	Low	EUR
14:00	(France) 12-Month BTF Auction	Low	EUR
14:00	(France) 6-Month BTF Auction	Low	EUR
15:00	(Euro Area) Consumer Confidence	Medium	EUR
15:50	(United States) Fed Barkin Speech	Medium	USD
15:50	(United States) Fed Bostic Speech	Medium	USD
16:30	(United States) 3-Month Bill Auction	Low	USD
16:30	(United States) 6-Month Bill Auction	Low	USD
20:00	(El Salvador) Balance of Trade	Low	USD

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: -