GBP/JPY is on a short-term downtrend based on its 1-hour time frame. The pair has made lower lows and lower highs, forming a falling channel.
At the moment, GBP/JPY is in the middle of the channel on its way down. Stochastic is moving lower, although it has already reached the oversold area. It hasn’t crossed yet though, which means that pound bears are still in control. The pair could still make its way to the bottom of the channel before bouncing back up.
The market events for the UK today are the BOE financial stability report and the government spending review. Public sector borrowing has improved in the UK recently, which could suggest that we’d hear upbeat comments from both the central bank and the government. If that’s the case, GBP/JPY could find its way back up sooner or later.
By Kate Curtis from Trader’s Way