Published on May 23, 2023

Daily Analysis For GBP/JPY 23-05-2023

GBP/JPY Analysis

Economic Events and Scenario for GBP/JPY

Economic Events : -

GMT	Event	Impact	Currency
00:00	(Australia) Judo Bank Composite PMI	Low	AUD
00:00	(Australia) Judo Bank Manufacturing PMI	High	AUD
00:00	(Australia) Judo Bank Services PMI	High	AUD
01:00	(Montenegro) Independence Day	None	EUR
01:30	(Japan) Jibun Bank Manufacturing PMI	Medium	JPY
01:30	(Japan) Jibun Bank Services PMI	Medium	JPY
01:30	(Japan) Jibun Bank Composite PMI	Low	JPY
07:00	(Lithuania) Industrial Production MoM	Low	EUR
07:00	(Lithuania) Industrial Production YoY	Low	EUR
07:00	(United Kingdom) Public Sector Net Borrowing	Low	GBP
07:00	(United Kingdom) Public Sector Net Borrowing Ex Banks	Low	GBP
08:00	(Slovakia) Current Account	Low	EUR
08:15	(France) S&P Global Composite PMI	Low	EUR
08:15	(France) S&P Global Manufacturing PMI	Medium	EUR
08:15	(France) S&P Global Services PMI	Medium	EUR
08:15	(Euro Area) ECB Guindos Speech	High	EUR
08:15	(Euro Area) ECB Jochnick Speech	Low	EUR
08:30	(Germany) S&P Global Composite PMI	Low	EUR
08:30	(Germany) S&P Global Services PMI	High	EUR
08:30	(Germany) S&P Global Manufacturing PMI	High	EUR
09:00	(Euro Area) Current Account	Low	EUR
09:00	(Euro Area) S&P Global Composite PMI	Low	EUR
09:00	(Euro Area) S&P Global Services PMI	High	EUR
09:00	(Euro Area) S&P Global Manufacturing PMI	High	EUR
09:00	(Euro Area) Current Account s.a	Low	EUR
09:30	(Slovenia) Consumer Confidence	Low	EUR
09:30	(United Kingdom) S&P Global/CIPS Manufacturing PMI	High	GBP
09:30	(United Kingdom) S&P Global/CIPS UK Services PMI	High	GBP
09:30	(United Kingdom) S&P Global/CIPS Composite PMI	Low	GBP
10:00	(Italy) Current Account	Low	EUR
10:00	(United Kingdom) 28-Year Index-Linked Treasury Gilt Auction	Low	GBP
10:30	(Germany) 2-Year Schatz Auction	Low	EUR
11:00	(Latvia) PPI YoY	Low	EUR
11:00	(Latvia) PPI MoM	Low	EUR
11:25	(Euro Area) ECB Enria Speech	Low	EUR
13:00	(United States) Building Permits	Medium	USD
13:00	(United States) Building Permits MoM	Low	USD
13:30	(Canada) Raw Materials Prices YoY	Low	CAD
13:30	(Canada) Raw Materials Prices MoM	Low	CAD
13:30	(Canada) PPI YoY	Low	CAD
13:30	(Canada) PPI MoM	Low	CAD
13:55	(United States) Redbook YoY	Low	USD
14:00	(United States) Fed Logan Speech	Medium	USD
14:45	(United States) S&P Global Services PMI	High	USD
14:45	(United States) S&P Global Composite PMI	Medium	USD
14:45	(United States) S&P Global Manufacturing PMI	High	USD
15:00	(United States) Richmond Fed Manufacturing Shipments Index	Low	USD
15:00	(United States) New Home Sales MoM	High	USD
15:00	(United States) Richmond Fed Services Index	Low	USD
15:00	(United States) New Home Sales	High	USD
15:00	(United States) Richmond Fed Manufacturing Index	Low	USD
15:30	(Slovenia) Unemployment Rate	Low	EUR
18:00	(United States) 2-Year Note Auction	Low	USD
20:00	(El Salvador) Balance of Trade	Low	USD
21:30	(United States) API Crude Oil Stock Change	Medium	USD
23:45	(New Zealand) Retail Sales YoY	High	NZD
23:45	(New Zealand) Retail Sales QoQ	High	NZD

Today's Scenario: - In the European session, GBP/JPY has reached a new year-to-date (YTD) high of 172.57, driven by a risk-on sentiment and a weaker Japanese Yen (JPY). This comes ahead of a significant week for the Pound Sterling (GBP). The direction of the GBP/JPY pair could be influenced by the release of PMIs in the United Kingdom (UK) and the upcoming update on the Consumer Price Index (CPI) for April, scheduled for Wednesday. As of now, the GBP/JPY is trading at 172.34, having briefly dipped to a low of 171.19.

Buy Scenario: - On the upside, if the GBP/JPY resumes its uptrend, it would need to surpass the YTD high of 172.57. Once this level is breached, the pair could rally towards 173.00 before potentially reaching the 174.00 level. Till we do not advise to buy GBP/JPY.

Sell Scenario: - Last week, the GBP/JPY witnessed a breakout from a falling wedge pattern, which paved the way for a test of the year-to-date (YTD) high. While the GBP/JPY's price action has been gaining momentum and forming higher highs, the Relative Strength Index (RSI) is not following suit. This indicates a negative divergence between price action and the RSI, suggesting a potential pullback and a test of the top trendline of the falling wedge pattern before posing a threat to higher prices.

Consequently, the GBP/JPY is likely to experience a pullback. The initial support level can be found at the 172.00 level, followed by the low reached on May 22 at 171.19. A break below these levels would expose the 171.00 mark, followed by the 20-day Exponential Moving Average (EMA) at 170.04, which is closely aligned with the falling wedge trendline. Till we do not advise to sell GBP/JPY.

Support and Resistance Level: -