GBP/JPY keeps lower as the pound stays pressured, what levels to look out for?

GBP/JPY has fallen below both its key hourly moving averages

ForexLive

As the pound continues to sit lower today, it is also weighing on GBP/JPY as price now breaks below the 200-hour MA (blue line). That means sellers are now in near-term control and will be eyeing for a move lower as the momentum shifts towards their side.

In terms of support levels, there is mild support next around 142.70 and then around 142.35-50 next from recent lows as seen in trading last week. In the bigger picture though:

GBP/JPY D1 20-01

There is a hint of a double-top pattern close to 144.50 and that has since helped the pair move lower – the pound side of the equation isn’t helping too as the currency stays weaker amid increasing odds of the BOE cutting rates next week.

The fact that sellers have now recaptured the near-term momentum serves to validate the technical pattern above – with risk now being able to be defined and limited by the key hourly moving averages @ 143.16 and 143.40 respectively.

Looking at the daily chart, any downside momentum could see a move towards support around the 38.2 retracement level @ 141.26 – a level that the pair has bounced off twice over the past few weeks of trading.

From a fundamental perspective, the pound will be a key focus amid UK economic data set to be released later in the week. It is all about BOE pricing at this stage but I would expect the currency to stay pressured amid heightened odds of a rate cut this month.

Meanwhile, the yen will be heavily dependent on the risk mood more than anything else – considering that the BOJ policy decision tomorrow is expected to be a non-event.

As such, look towards the performance in Wall St for more of a clue on how yen pairs may move around this week; as US stocks still don’t look like giving up on chasing record highs as seen even at the end of last week.

In short, the pound side of the equation is likely to keep the pair pressured but the yen side of the equation may balance that out a little depending on how the risk mood progresses.