Fears of a deepening recession in the U.K. paired with a fall in risk appetite led the GBP/JPY to pullback from a three-month high, and the pair is likely to fall lower over the week as fundamental headwinds continue to reinforce a dour outlook for growth and inflation.
[B]Currency Pair: [/B]GBP/JPY
[B]Chart:[/B] 60 Min Charts
[B]Short-Term Bias:[/B] Flat
[B][U]Analysis
[/U][/B]
Fears of a deepening recession in the U.K. paired with a fall in risk appetite led the GBP/JPY to pullback from a three-month high, and the pair is likely to fall lower over the week as fundamental headwinds continue to reinforce a dour outlook for growth and inflation. After reaching a high of 165.11 on 10/30, the pound-yen slipped to a low of 118.83 in January, and the lack of momentum to hold above 141.90-142.00 (50.0% Fib) should drag the pair towards 136.40-50 (38.2%) over the remainder of the week. Over the next few hours of trading, I expect the GBP/JPY to trade along the 120 SMA however, as the economic calendar is expected to show a worsening outlook for the U.K., deteriorating fundamentals are likely to weigh on the British pound as the region faces its worst economic downturn in over half a century. Nevertheless, the G20 summit in London this week has spurred hopes for coordinated action as policymakers attempt to restore confidence in the financial markets however, as investors remain skeptical of the group’s ability to meet on common ground, qualms emerging from the meeting could weigh on the markets as the downturn in the global economy intensifies. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.
[I]To contact the author of this article, please email: <[email protected]>[/I]
[B][I][I] Related Articles:[/I][/I][/B]
[B][I][I]New Zealand Dollar Short Head and Shoulders Pattern[/I][/I][/B]
[[I][B]Euro Fails to Hold Early Gains; Usd/Cad Stops Trailed for Profit (Daily Classical)[/B][/I]](javascript:void(0);/1238564127302/)
[I][B]Forex Trading Weekly Forecast - 03.23.09[/B][/I]
[I][B]A Tight Range And The Approaching G20 Meeting May Offer A Quick GBPCHF Range[/B][/I]