The British pound has fallen sharply against the Japanese yen currency as Japan released high inflation data and the BOJ minutes talked down rates and inflation during their recent minutes release.
GBPJPY tank sharply as the Japanese yen crosses came under pressure on the strong CPI print. Core consumer prices in Japan climbed 3.7 percent in November, a nearly 41-year high, as increased import prices for food and energy, exacerbated by a weaker yen, maintained inflationary pressure, the government said Friday.
The nationwide core consumer price index, excluding volatile fresh food items, rose for the 15th straight month. The gain of 3.7 percent was the largest since December 1981.
Core CPI remained above the Bank of Japan’s 2 percent target for the eighth straight month, data by the Ministry of Internal Affairs and Communications showed, having been pushed up by higher import costs and a weak yen.
I believe with the fundamentals of these economies are increasingly interesting and buying the GBPJPY is risky if we are about to see the Bank of Japan act next month.
The ActivTrader Market Sentiment tool shows that some 80 percent of traders are bullish towards the GBPJPY pair right now. This goes strongly against the fundamentals todays, so do bare this in mind.
However, bullish sentiment does not bode well for more gains in the GBPJPY pair as historical data has shown that fading one-sentiment skews amongst the retail crowd has proved to be lucrative.
GBPJPY Short-Term Technical Analysis
The four-hour time frame shows that the GBPJPY pair has broken under its 6-week trading range and pretty much tanked to the downside.
According to the range more downside is coming. However, bulls need to anchor the price above the 163.00 level to secure further price gains in the GBPJPY pair.
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GBPJPY Medium-Term Technical Analysis
Looking at the daily time chart shows that the GBPJPY pair has formed a large, inverted head and shoulders pattern. The chart actually looks very bullish.
Buyers have repeatedly failed to hold the price above the top of the mentioned inverted head and shoulders pattern. Interestingly, if bulls can hold the price above the 164.00 level then a powerful rally towards the 180.00 level should be expected.
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