GBPJPY has been trending lower, moving inside a descending channel visible on its 4-hour time frame. Price got rejected at the resistance and is making its way towards support at 148.00.
The 100 SMA appears to be crossing below the 200 SMA to confirm that the path of least resistance is to the downside. However, both stochastic and RSI are deep in the oversold regions, suggesting that a correction might take place sooner or later.
If so, price could still retreat to the top of the range at 158.00-160.00, which might continue to keep gains in check. UK manufacturing production is up for release today and analysts are expecting to see a 0.2% decline, possibly pushing the pair below its recent lows near 151.50.
Japanese officials have jawboned the yen yesterday, reminding market watchers that they are watching yen FX levels closely. However, traders didn’t seem to buy their bluff and even pushed the yen higher.
Risk-off moves were seen in recent sessions after the ECB minutes revealed that policymakers actually considered larger rate cuts. ECB Governor Draghi also emphasized that they’re ready to do “whatever it takes” to stimulate growth and inflation.
As for the UK economy itself, Brexit concerns continue to linger and weigh on the pound’s gains. Data from the UK economy has been mostly weaker than expected in previous weeks, adding to downside pressure.
However, weekend risks could lead to potential gaps before the markets reopen on Monday. Updates on crude oil discussions could influence sentiment and increased odds of seeing an agreement on production caps could mean risk-taking activity. With that, traders might be keen to book profits ahead of the weekend and lead to a bounce.
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