GBPJPY sold off recently but is still trading above an ascending trend line connecting the latest lows of price action on the 1-hour chart. Price is gearing up for a test of the support level, which lines up with the Fib levels. In particular, the 50% level is close to the 142.50 minor psychological support.
The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. In addition, the 200 SMA lines up with the rising trend line support, adding to its strength as a potential floor.
Stochastic is pointing down to show that sellers are still in control of price action. Once the oscillator reaches the oversold area and turns higher, buyers could return and push price up to the swing high at 146.00 or higher.
UK Supreme Court hearings are still influencing sterling movements for the time being, as the government might no longer need to get the lawmakers’ approval before proceeding with Article 50. Prior to this PM May conceded to publishing their Brexit strategy in order to get the go signal to proceed with their timeline for starting negotiations.
Economic data from the UK has been mostly stronger than expected, as industry PMIs have reported improvements and reflected resilience despite uncertainties. UK manufacturing and industrial production, however, have turned out weaker than expected.
There are no reports due from the UK today while Japan has just printed mixed data. Its current account surplus was larger than expected while the final GDP reading was downgraded from 0.6% to 0.3%. UK goods trade balance and construction output are up for release on Friday.
By Kate Curtis from Trader’s Way