The GBPJPY currency pair has bounced back strongly from a low of 183.20, forming a V-shaped recovery. This has occurred because investors anticipate that the Bank of Japan (BoJ) will continue to implement measures to further tighten its monetary policy.

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• GBP/JPY delivers a V-shape recovery from 183.20 as the BoJ is expected to continue tightening policy further.

The pair currently trades last at 183.689.

The previous day high was 183.95 while the previous day low was 182.95. The daily 38.2% Fib levels comes at 183.57, expected to provide support. Similarly, the daily 61.8% fib level is at 183.33, expected to provide support.

The GBP/JPY pair discovered buying interest near 183.20 after a vertical sell-off that was inspired by weak factory activities in the United Kingdom economy in July. The cross recovered due to broader weakness in the Japanese Yen as the Bank of Japan (BoJ) is expected to keep the interest rate policy steady ahead.

BoJ Governor Kazuo Ueda commented recently that policymakers will continue to favor an expansionary monetary policy framework as core inflation remains a little below the desired target. The central bank is not expected to abandon negative interest rates but may tweak the Yield Curve Control.

On the United Kingdom front, the Office for National Statistics (ONS) reported monthly Industrial Production and Manufacturing Production contracted by 0.7% and 0.8%, while investors anticipated contraction by 0.6% and 1.0% respectively. The Gross Domestic Product (GDP) shrank by 0.5% in July against an expansion of 0.5%, recorded for June.

On Tuesday, the labor market data for July remained vulnerable. Three months to July Unemployment Rate rose to 4.3% as anticipated by market participants. UK employers shed 207K jobs in the three months to July, more than the 185K decline forecasted by markets. Laborforce reported retrenchment consecutively for the second month.

Meanwhile, wage growth momentum strengthened further in July, warranting the need for an interest rate hike by the Bank of England (BoE) on September 21. UK’s economic outlook is expected to weaken further as more interest rate hikes would impact the labor market and factory activities further.

Technical Levels: Supports and Resistances

GBPJPY currently trading at 183.7 at the time of writing. Pair opened at 183.71 and is trading with a change of -0.01 % .

The pair is trading below its 20 Daily moving average @ 184.79, above its 50 Daily moving average @ 183.14 , above its 100 Daily moving average @ 179.0 and above its 200 Daily moving average @ 170.62

The previous day high was 183.95 while the previous day low was 182.95. The daily 38.2% Fib levels comes at 183.57, expected to provide support. Similarly, the daily 61.8% fib level is at 183.33, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 183.12, 182.54, 182.13
• Pivot resistance is noted at 184.12, 184.53, 185.12

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