- The British pound falls in tandem with risk-sensitive currencies as market mood conditions dampen.
- The Japanese yen is the strongest currency of the day.
- GBP/JPY has an upward bias; despite falling 100-pips on the day, GBP bulls showed around the 156.00 figure.
On Monday, the British pound plunges against the safe-haven Japanese yen, on a risk-off market mood, spurred by expectations of higher rates in the US and worldwide inflationary pressures. Equity indices record losses between 1.39% and 2.44% in the US, while the Japanese yen gain against most G8 currencies. At the time of writing, the GBP/JPY is trading at 156.13.
In the overnight session for North American traders, the GBP/JPY pair was subdued in the 157.00-40 range. However, a break of an upslope trendline amid dampened market conditions spurred a 100-pip drop from 157.00 to 156.00, which fulfilled the Average Daily Range (ADR) of the cross-currency for the last ten days, of 98 pips.
GBP/JPY Price Forecast: Technical outlook
The GBP/JPY pair is upward biased. The daily moving averages (DMAs) reside below the spot price, but the high reached on January 5 at 157.76, short of October 20, 2021, daily high at 158.22, exposed the pair to downward pressure, leaving it at the mercy of the market mood.
To the upside, the first resistance level would be the 200-hour simple moving average (SMA) at 156.20. A decisive break above that level would expose the S2 daily pivot at 156.47, followed by the S1 daily pivot at 156.76.
On the downside, the first support would be the psychological 156.00 figure which almost intersects with the S3 daily pivot at 155.97. A breach of the latter would expose the January 4 daily low at 155.34. and then the January 3 daily low at 154.90.