#GBPJPY @ 163.058 The pound shrugs off the previous weakness to bounce up towards 163.00. (Pivot Orderbook analysis)

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• The pound shrugs off the previous weakness to bounce up towards 163.00.
• Rumours about the extension of the BoE’s bond-buying are buoying GBP.
• Downbeat GBP data confirm fears of a recession in the UK.

The pair currently trades last at 163.058.

The previous day high was 162.68 while the previous day low was 159.73. The daily 38.2% Fib levels comes at 160.86, expected to provide support. Similarly, the daily 61.8% fib level is at 161.55, expected to provide support.

The British pound is showing a strong recovery after having lost more than 3% on its reversal from the 165.70 high last week. The pair has bounced right below 160.00 on Wednesday to approach the 163.00 area, buoyed by rumours that the BoE might extend its emergency program.

A Financial Times news report suggesting that the Bank of England might have signaled privately to lenders that it is open to extending its bond-buying program has cheered investors, pushing the battered GBP higher against its main rivals.

The Bank of England spooked the market on Tuesday when BoE Governor Andrew Bailey urged pension fund managers to rebalance their portfolios before Friday, the deadline for the bank’s emergency program.

Beyond that, additional media reports point out that the British Government might be ready to scrap more elements of the mini-Budget that rattled financial markets.

The GBP/JPY lost about 1.5% on the back of Bailey’s words on Tuesday, to complete a 3.4% decline over the previous five days. The pair, however, is regaining lost ground on Wednesday showing a nearly 2% recovery despite the downbeat macroeconomic data.

British economy contracted at a 0.3% pace in August, against market expectations of a 0% reading and following a 0.1% expansion in the month before. These figures confirm predictions that the UK economy could be entering recession over the next months.

Manufacturing production has dropped at a 1.6% pace, which has been one of the main reasons for the economic contraction.

Technical Levels: Supports and Resistances

GBPJPY currently trading at 163.24 at the time of writing. Pair opened at 159.98 and is trading with a change of 2.04 % .

The pair remains strongly bullish on the daily timeframe. It trades above its 20 SMA @ 161.24, 50 SMA 162.17, 100 SMA @ 163.14 and 200 SMA @ 160.7.

The previous day high was 162.68 while the previous day low was 159.73. The daily 38.2% Fib levels comes at 160.86, expected to provide support. Similarly, the daily 61.8% fib level is at 161.55, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 158.92, 157.85, 155.97
• Pivot resistance is noted at 161.86, 163.75, 164.81

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