#GBPJPY @ 161.166 retreats from a nearly four-week high touched on Monday, though lacks follow-through. (Pivot Orderbook analysis)

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• GBP/JPY retreats from a nearly four-week high touched on Monday, though lacks follow-through.
• A combination of factors revives demand for the safe-haven JPY and exerts pressure on the cross.
• Expectations that elevated UK CPI might force the BoE to continue raising rates helps limit losses.

The pair currently trades last at 161.166.

The previous day high was 161.81 while the previous day low was 160.37. The daily 38.2% Fib levels comes at 161.26, expected to provide resistance. Similarly, the daily 61.8% fib level is at 160.92, expected to provide support.

The GBP/JPY cross comes under some selling pressure on Tuesday and erodes a part of the overnight gains to a nearly four-week high. The cross remains depressed around the 161.25-161.30 area through the early European session and for now, seems to have snapped a six-day winning streak.

A combination of factors assists the Japanese Yen to regain some positive traction and stall its recent corrective decline, which, in turn, is seen weighing on the GBP/JPY cross. Despite the Bank of Japan’s decision last week to leave its policy settings unchanged, investors seem convinced that a shirt in stance is inevitable amid stubbornly high inflation. The bets were lifted after the latest CPI report from Japan showed that consumer inflation rose to a 41-year high level of 4% in December. Apart from this, worries about a deeper global economic downturn further underpin the JPY’s relative safe-haven status against its British counterpart.

The downside for the GBP/JPY cross, meanwhile, seems limited amid speculations that elevated consumer inflation will maintain pressure on the Bank of England (BoE) to continue raising interest rates. In fact, the UK Office for National Statistics reported last week that the core CPI in the UK stayed at 6.3% in December or more than three times the BoE’s 2% target. Furthermore, the emergence of fresh selling around the US Dollar benefits the British Pound, which might hold back traders from placing aggressive bearish bets. This, in turn, warrants some caution before positioning for an extension of the intraday depreciating move.

Market participants now look forward to the release of the flash UK PMI prints for January for some impetus. Apart from this, the broader risk sentiment will influence the safe-haven JPY and contribute to producing short-term trading opportunities around the GBP/JPY cross. Bulls, meanwhile, are likely to wait for some follow-through buying beyond the 161.75-161.80 area, above which spot prices could aim to test the late December swing high, around the 162.30-162.35 region. The momentum could get extended further towards the 163.00 mark en route to the 100-day SMA, which coincides with the 164.00 horizontal support breakpoint near the 164.00 level.

Technical Levels: Supports and Resistances

GBPJPY currently trading at 161.3 at the time of writing. Pair opened at 161.71 and is trading with a change of -0.25 % .

The pair is trading above its 20 Daily moving average @ 159.27, below its 50 Daily moving average @ 163.17 , below its 100 Daily moving average @ 164.02 and below its 200 Daily moving average @ 163.49

The previous day high was 161.81 while the previous day low was 160.37. The daily 38.2% Fib levels comes at 161.26, expected to provide resistance. Similarly, the daily 61.8% fib level is at 160.92, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 160.78, 159.86, 159.34
• Pivot resistance is noted at 162.22, 162.74, 163.66

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