- GBP/JPY started a strong recovery from the 129.30 monthly low.
- It surpassed a major bearish trend line with resistance near 131.25 on the 4-hours chart.
- The UK Claimant count jumped 856.6K in April 2020, a lot more than the 150K forecast.
- The UK Consumer Price Index could increase 0.9% in April 2020 (YoY), less than the last 1.5%.
GBP/JPY Technical Analysis
This past week, the British Pound extended its decline below the 130.00 zone against the Japanese Yen. GBP/JPY traded as low as 129.30 before it started a strong recovery.
Looking at the 4-hours chart, the pair climbed above many important hurdles such as 130.00 and 130.50 to move into a positive zone. There was a break above the 50% Fib retracement level of the last decline from the 133.18 high to 129.30 low.
More importantly, the pair surpassed a major bearish trend line with resistance near 131.25 on the same chart. It even spiked above the 100 simple moving average (red, 4-hours), and the 76.4% Fib retracement level of the last decline from the 133.18 high to 129.30 low.
On the upside, there is a key resistance waiting near the 133.10 level and the 200 simple moving average (green, 4-hours). If the pair continues to rise above 133.00 and 133.10, it could revisit the 135.00 resistance zone.
Conversely, GBP/JPY might start a downside correction below 131.50. The first support is seen near the 131.20, below which the pair is likely to revisit the 130.50 support.
Fundamentally, the UK Claimant Change figure for April 2020 was released by the National Statistics. The market was looking for a change of 150K in the claimant count.
However, the result was disappointing as there was a sharp rise of 856.5K. Conversely, the ILO Unemployment Rate declined from 4% to 3.9% (3M) (Mar).
Overall, GBP/JPY is showing positive signs and it could to continue to rise above 132.50 and 133.00. Looking at GBP/USD, the pair managed to surpass the 1.2200 resistance zone.
Upcoming Economic Releases
- UK Consumer Price Index April 2020 (YoY) – Forecast +0.9%, versus +1.5% previous.
- UK Core Consumer Price Index April 2020 (YoY) – Forecast +1.5%, versus +1.6% previous.
- Euro Zone CPI for April 2020 (YoY) - Forecast +0.4%, versus +0.4% previous.
- Euro Zone CPI for April 2020 (MoM) - Forecast +0.3%, versus +0.5% previous.
- Canadian Consumer Price Index April 2020 (MoM) – Forecast -0.6%, versus -0.6% previous.
- Canadian Consumer Price Index April 2020 (YoY) – Forecast -0.1%, versus +0.9% previous.
- FOMC Meeting Minutes