GBP/JPY Reaching Crucial Juncture, 142.75 Holds Key12 February, 2020 by Aayush Jindal in Market Analysis
- GBP/JPY started an upside correction from the 141.25 support area.
- There is a major bearish trend line forming with resistance near 142.75 on the 4-hours chart.
- The UK GDP remained flat in Q4 2019 (Preliminary) (QoQ), down from the last revised +0.5%.
- The UK Industrial Production increased 0.1% in Dec 2019 (MoM), less than the +0.3% forecast.
GBP/JPY Technical Analysis
This past week, the British Pound topped near the 143.40 area and declined sharply against the US Dollar. GBP/JPY traded below the 142.80 support area and tested the 141.25 support.
Looking at the 4-hours chart, the pair traded as low as 141.23 and settled below both the 100 simple moving average (red, 4-hours) and the 200 simple moving average (green, 4-hours).
Recently, the pair started an upside correction and traded above the 141.75 level. Besides, there was a break above the 23.6% Fib retracement level of the last decline from the 143.37 high to 141.23 low.
However, there is a major resistance waiting on the upside near the 142.75 and 142.80 levels. More importantly, there is a major bearish trend line forming with resistance near 142.75.
The 61.8% Fib retracement level of the last decline from the 143.37 high to 141.23 low is also near 142.75 along with the 100 simple moving average (red, 4-hours).
Therefore, the pair might struggle to clear the 142.75 resistance. A successful break above 142.75 could lead GBP/JPY towards 143.40 and 143.50. If not, it could revisit the 141.25 support area.
Fundamentally, the UK Gross Domestic Product report for Q4 2019 (Prelim) was released by the National Statistics. The market was looking for no change in the GDP compared with the previous quarter.
The actual result was similar, as there was no increase in the GDP and it remained flat at 0% in Q4 2019 (QoQ). Conversely, the last reading was revised up from 0.4% to 0.5%.
The report added:
Growth in both services and construction was offset by a fall in production, which resulted in 0.0% GDP growth in the three months to December 2019.
The report had no major impact on GBP/USD and GBP/JPY, but both are facing a lot of hurdles on the upside.
Upcoming Economic Releases
- Euro Zone Industrial Production for Dec 2019 (MoM) – Forecast -1.6%, versus +0.2% previous.