Japanese Yen GBP/JPY rates, charts and analysis
- UK inflation was wrong to expectations but remains high.
- The technical picture for the GBP/JPY turns negative.
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GBP/JPY It is on the way to post a fourth-lower high on the daily chart, after the British Pound fell following the latest inflation report in the UK. The release of a lower-than-expected CPI saw the final interest rate expectation in the UK drop from around 6.25% to just under 6%.
United Kingdom (GBP) Breaking News: UK CPI misses Sterling
The short-term technical outlook for the GBP/JPY remains negative as the daily chart shows that the pair is swinging from a multi-year high. The GBP/JPY is up less than 18% this year due to a combination of Japan’s ultra-loose monetary policy and ongoing monetary tightening in the UK. While the former is still in play, the latter could change after today’s inflation data and expectations that the July inflation reading will be lower even as Ofgem’s energy price cap – which was cut from £2,500 to £2,074 – comes into play.
The daily chart shows that the GBP/JPY is moving lower after multiple touches and rejection of 184. The pair is now also below the 20-day SMA, in the process of making a fourth consecutive lower high and heading back towards the short-term support at 179.48. A confirmed break below here would trigger the 50 day SMA, currently at 177.45, and the 23.6% Fibonacci retracement of the January 3rd to July 5th move at 177.03.
Daily price chart for GBP/JPY – Jul 19, 2023
Retail sentiment for the GBP/JPY pair is mixed
Retail trader data shows that 28.30% of traders own a net yellow with the short-to-long ratio at 2.53 to 1, the number of long-term traders is 7.08% lower than yesterday and 8.25% higher than last week, while the number of short traders is down 2.21% from yesterday and 14.05% lower than last week.
We usually take a view contrarian to crowd sentiment, and the fact that traders are short on the bargain suggests that GBP/JPY prices may continue to rise. Positioning is more net than yesterday but less net than last week. The combination of current feelings and recent changes gives us more Divergent bias in GBP/JPY trading.
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