GBPJPY – Can This Rebound Sustain In British Pound?
- British Pound continued to weaken not only against the US Dollar, but also against the Japanese Yen.
- There was a contracting triangle pattern on the hourly chart of GBP/JPY, which was broken to ignite a downside move.
- The UK Trade Balance figure reported by National Statistics posted a better than expected trade deficit of £-2.57B in May 2016.
UK Trade Balance
Today the UK saw Trade Balance (non-EU) data by National Statistics. The market was expecting the balance between exports and imports of total goods and services to post a deficit of £-2.900B in May 2016.
However, the end result was better, as the trade deficit (non-EU) was lower and came in at £-2.57B. When we look at the total trade balance, then the deficit was £-2.263B.
Commenting on the figures, the report highlighted that “the UK’s deficit on trade in goods and services was estimated to have been £2.3 billion in May 2016, a widening of £0.3 billion from April 2016. Exports decreased by £2.0 billion and imports decreased by £1.7 billion”.
The British Pound managed to recover a few pips after the release, but it faces a couple of major resistance on the upside against the Japanese yen.
GBP/JPY Price Analysis
The GBP/JPY pair had a bad week, as it moved down and traded towards the 128.60 level where it found bids. The pair then recovered and formed a contracting triangle pattern on the hourly chart.
Later, the pair found resistance near the 38.2% Fib retracement level of the last drop from the 136.79 high to 128.62 low, and started moving down.
During the downside move, it broke the highlighted contracting triangle pattern to trade towards 130.00. It is again recovering, but may face sellers near the same resistance area, as highlighted in the chart.
The 100 hourly simple moving average is also sitting near 132.00-20 levels to act as a barrier for more gains. Overall, as long as the GBP/JPY pair is below the mentioned resistance levels, it may face sellers on the upside.
