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GBP/JPY remains caught in the middle still


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The ping pong action around the 200-day MA continues


ForexLive

Once again, price failed to hold a break above the daily resistance from the July high @ 148.31 in yesterday’s trading but the upside momentum continues to be defended as buyers are not giving up on defending the 200-day MA (blue line) which sits at 148.08 today.
Over the past few weeks, buyers have been leaning on support from the swing region low of around 147.00 and the 50.0 retracement level around 147.96 to help their case in a bid higher. Meanwhile, sellers have been leaning on the daily resistance around 148.31 as well as offers close to 150.00 to help pin down the pair.
And that so far is the embodiment of price action in the pair. Looking at today’s movement:

It’s very much the same push and pull action but on a smaller scale. Sellers continue to defend the near-term bearish bias by holding the pair below the two key hourly moving averages. But buyers aren’t budging as they defend any move towards the 148.00 handle.
This is very much a case of lacking identity for the pair. On one hand, there are hints of Brexit optimism that continues to underpin the pound recently. On the other, there is the current risk off sentiment that we’re seeing in markets that is supporting haven flows into the yen.
Eventually, something’s gotta give and it could very well hinge on the US CPI data release later today – ironically not something that involves either currency pairs directly. A surprise to the upside on inflation or wages could very well set the tone in exacerbating further declines in equities and potentially break the deadlock here in GBP/JPY.
But the biggest factor that will determine the next key directional move in the pair remains that of Brexit in my view. A Brexit deal or further optimism of one will go a long way in supporting the pound from current levels while the opposite is also true if a deal fails to come to fruition.
Headline risks are crucial right now alongside market sentiment for trading GBP/JPY but the technical levels are well defined and risk can be limited in that regard. So, taking a trade on either side of a move isn’t really wrong (depends on your Brexit conviction) but I’d wait for more clarity i.e. once the US CPI report is out of the way.

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