Published on Mar 28, 2023

Daily Analysis For GBP/JPY 28-03-2023

GBP/JPY Analysis

Economic Events and Scenario for GBP/JPY

Economic Events : -

GMT	Event	Impact	Currency
1:30	(Australia) Retail Sales MoM	High	AUD
4:35	(Japan) 40-Year JGB Auction	Low	JPY
5:15	(Australia) RBA Connolly Speech	Medium	AUD
7:00	(Lithuania) Retail Sales MoM	Low	EUR
7:00	(Lithuania) Retail Sales YoY	Low	EUR
7:45	(France) Business Climate Indicator	Low	EUR
7:45	(France) Business Confidence	Medium	EUR
9:00	(Italy) Consumer Confidence	Medium	EUR
9:00	(Italy) Business Confidence	Medium	EUR
9:35	(Euro Area) ECB Enria Speech	Medium	EUR
9:45	(United Kingdom) BoE Gov Bailey Speech	Medium	GBP
10:10	(Italy) Index-Linked BTP Auction	Low	EUR
10:10	(Italy) BTP Short Term	Low	EUR
10:10	(Italy) 10-Year BTP Short Term Auction	Low	EUR
10:30	(Germany) 2-Year Schatz Auction	Low	EUR
11:00	(Ireland) Retail Sales YoY	Low	EUR
11:00	(Ireland) Retail Sales MoM	Low	EUR
11:00	(Luxembourg) Balance of Trade	Low	EUR
13:30	(United States) Retail Inventories Ex Autos MoM	Medium	USD
13:30	(United States) Goods Trade Balance	High	USD
13:30	(United States) Wholesale Inventories MoM	Medium	USD
13:55	(United States) Redbook YoY	Low	USD
14:00	(United States) House Price Index YoY	Low	USD
14:00	(United States) House Price Index	Low	USD
14:00	(United States) S&P/Case-Shiller Home Price YoY	Medium	USD
14:00	(United States) S&P/Case-Shiller Home Price MoM	Medium	USD
14:00	(United States) House Price Index MoM	Low	USD
15:00	(United States) CB Consumer Confidence	Medium	USD
15:00	(United States) Richmond Fed Manufacturing Shipments Index	Low	USD
15:00	(United States) Richmond Fed Manufacturing Index	Low	USD
15:00	(United States) Richmond Fed Services Index	Low	USD
15:00	(United States) Fed Barr Testimony	Medium	USD

Today's Scenario: - GBP/JPY saw a brief pause in its sharp rally, reaching a weekly high of 161.80, as a positive risk sentiment and rising global bond yields supported the currency pair.

Bank of England (BoE) Governor Bailey recently emphasized the importance of remaining vigilant for signs of persistent inflationary pressures. He noted that if such pressures materialize, further monetary tightening may be necessary. While there are indications of economic resilience, Bailey warned that the path of inflation might not be entirely smooth. Preventing externally-driven inflation from becoming permanent is a critical monetary policy priority. Bailey also highlighted significant strains in parts of the global banking system, which could impact the wider global economy.

Bailey further noted that the full effect of recent bank rate increases has yet to be felt, and early retirement-driven inactivity may have contributed to a rise in cyclical rates. The BoE has raised bank rates significantly in response to these factors. However, Bailey cautioned that inflation may be more persistent than anticipated, underscoring the importance of staying alert for signs of inflationary pressures. If such pressures emerge, further monetary tightening may be necessary to keep inflation under control.

Buy Scenario: - On the other hand, a break below the 160.90 level could invalidate the short-term bullish bias and target the 160.50 horizontal support, followed by the 160.00 psychological level. Further down, the 50-EMA at 159.40 could emerge as support.

Overall, the GBP/JPY is currently biased to the upside, with the potential to rally towards resistance levels at 162.00, 162.22, 162.50-60, and 163.33. However, a break below support at 160.90 could shift the bias to the downside, targeting support levels at 160.50, 160.00, and 159.40. Till we do not advise to buy GBP/JPY.

Sell Scenario: - In the near term, if the GBP/JPY faces downward pressure, the first level of support would be at the 50-EMA located at 161.14, followed by the R1 daily pivot at 161.01. If the pair breaks through these levels, it could potentially fall to the 20-EMA at 160.78, and then to the central pivot at 159.63, we do not advise to sell GBP/JPY.

Support and Resistance Level: -