In today’s comprehensive GBPJPY technical analysis, we will first scrutinize the current economic conditions in the UK and Japan. Following that, we will meticulously delve into the details of the technical analysis of the GBPJPY pair.
Pound Sterling Fundamental Updates
Bloomberg—The return on the UK’s 10-year government bond, also known as a Gilt, has exceeded 4.7%, close to a 25-year record of 4.75% set in August. This is because people think worldwide interest rates will remain high.
Last week, we discovered that the rate at which prices increase in the UK, known as inflation, was at a low point of 6.7% in September. This was surprising because people thought it would decrease to 6.6%. At the same time, people in the UK aren’t getting paid as much more as we thought they would, and there are fewer job openings than there have been in over two years.
In addition, people are buying less stuff from shops, with sales decreasing by 0.9%, more than the expected drop of 0.2%. Now, everyone’s waiting to hear about how many people are unemployed and some early figures on business activity, due on Tuesday.
In other news, Moody’s, a company that rates how likely countries are to pay back their debts, said on Friday that the UK’s situation is “stable,” which is better than “negative.” They said this is because things have become more predictable after many ups and downs last year.
Japanese Yen Fundamental Updates
In Tokyo, the Nikkei 225 Index, a stock market index for the Tokyo Stock Exchange, fell 254 points or 0.81 percent on Monday. This means that the value of the shares in this index has decreased overall.
The companies that lost the most value were Pacific Metals (their share price went down by 4.21%), Nippon Sheet Glass (down by 3.80%), and Mitsui Engineering & Shipbuilding (down by 3.01%). On the other hand, some companies did well: Daiichi Sankyo’s share price went up by 3.91%, Astellas Pharma’s by 3.29%, and Shiseido’s by 3.23%.
This drop in the Nikkei 225 Index is part of a bigger picture. Stock markets worldwide feel nervous because of higher global bond yields and geopolitical risks in the Middle East. Investors are also waiting to hear about how much money major US technology companies have made recently and key US GDP and inflation readings.
Back in Japan, people were waiting for Tokyo’s inflation numbers, which gave an idea of how prices were changing across the country. Stocks linked to commodities (things like oil, gold, and steel) led the decline, with notable losses from Nippon Steel (-2.3%), Kobe Steel (-2.5%), JFE Holdings (-2.2%), Inpex Corp (-2.4%) and Eneos Holdings (-3%). Other big companies also saw their share prices fall, including Mitsubishi UFJ(-0.9%), Fast Retailing (-1.6%) and SoftBank Group (-2%).
GBPJPY Technical Analysis – A Bearish Slide
The GBPJPY currency pair is experiencing a bearish trend, having exited the bullish channel downward. This shift in market dynamics is further confirmed by the Stochastic indicator, which is presently hovering in the overbought zone. With the GBPJPY price steadfastly holding below the 182.9 mark, the bearish outlook for this currency pair remains strong.
Traders keeping a close eye on this pair might want to set their sights on the next target of 176.
However, it’s important to note that this bearish outlook could be invalidated if the GBPJPY price breaks out at the pivot point. In such a scenario, bullish traders could potentially look forward to a next target at R2, which stands at 187.9.
In summary, while the current market sentiment for the GBPJPY currency pair leans bearish, traders should remain vigilant for any potential price breakouts at the pivot point that could signal a shift towards a bullish market.