GBPJPY is starting to trend higher, moving above a rising trend line on its 1-hour time frame. Price is pulling back to this support area, which is around the 61.8% Fibonacci retracement level and a former resistance level.
The pair appears to have bounced off support at the dynamic inflection point at the 100 SMA, which also happens to be above the longer-term 200 SMA. This signals that the path of least resistance is to the upside and that bullish momentum is strengthening since the gap between the moving averages is widening.
Stochastic is heading up from the oversold zone, also indicating that buying momentum is picking up. RSI is on middle ground but is on its way up, which means that bulls are in control of GBPJPY price action for now. In that case, GBPJPY could make it back up to the previous highs at 143.00.
Event risks for this week include the UK CPI and jobs releases. Analysts are expecting the headline CPI to show a 0.4% gain and the core figure to show a climb from 1.2% to 1.3%. Employment could fall by 4.1K and keep the jobless rate unchanged at 5.0%. The average earnings index is expected to rise from 2.0% to 2.3%, indicating faster wage growth.
There are no major reports out of Japan today so yen pairs could be sensitive to risk sentiment. The pound could be still under a bit of pressure due to the Brexit and expectations of an interest rate cut in the next BOE policy meeting.
For today, BOE member MPC Martin Weale is set to make a testimony. Keep in mind that Weale is one of the more hawkish members of the UK central bank so a shift in his stance to a more dovish one could spur losses for the British currency.