GBP/JPY Holding Key Support Ahead of UK’s Employment Report
- GBP/JPY corrected lower from 136.00, but it found support near 134.00.
- It traded below a rising channel with support at 134.75 on the 4-hours chart.
- The UK Consumer Price Index increased 0.6% in June 2020 (YoY), more than the 0.4% market forecast.
- The UK Claimant Count could change 250K in June 2020, down from the last 528.9K.
GBP/JPY Technical Analysis
This past week, the British Pound tested the 136.00 resistance area against the Japanese Yen, where sellers emerged. GBP/JPY corrected lower below 135.00, but it holding a couple of important supports.
Looking at the 4-hours chart, the pair corrected lower from the 135.91 high. It broke the 23.6% Fib retracement level of the upward move from the 131.95 low to 135.91 high.
Moreover, it traded below a rising channel with support at 134.75. The pair even spiked below the 134.40 support level and the 200 simple moving average (green, 4-hours). However, the 134.00 area acted as a strong support.
The 50% Fib retracement level of the upward move from the 131.95 low to 135.91 high also provided support along with the 100 simple moving average (red, 4-hours).
On the upside, the pair seems to be facing hurdles near 135.00. A clear break above 135.00 may perhaps push the pair towards the main 136.00 resistance zone. Any further gains could lead the pair towards the 136.50 level.
Conversely, a downside break below the 134.00 support and the 100 SMA could lead GBP/JPY towards the 132.80 support level.
Fundamentally, the UK Consumer Price Index for June 2020 was released yesterday by the National Statistics. The market was looking for an increase of 0.4% in the CPI compared with the same month a year ago.
The result was above the market forecast, as the UK Consumer Price Index increased 0.6% in June 2020 (YoY). Looking at the Core CPI, there was a 1.4% increase (YoY), more than the 1.2% market forecast.
GBP/USD recovered nicely in the past few sessions and it climbed above 1.2600 before correcting lower. Similarly, there were decent gains in EUR/USD above 1.1400.
Upcoming Economic Releases
- UK Claimant Count Change June 2020 – Forecast 250K, versus 528.9K previous.
- UK ILO Unemployment Rate May 2020 (3M) – Forecast 4.2%, versus 3.9% previous.
- ECB Interest Rate Decision – Forecast 0%, versus 0% previous.
- US Initial Jobless Claims - Forecast 243K, versus 244K previous.