The pound has posted modest gains, recouping some of the ground lost to the euro and yen this week while lifting a few pips above the six-week high Cable saw earlier in the week, at 1.3342. Both the UK government’s fiscal budget and the OBR’s growth downgrade were near expectations, so the overall market impact has been correspondingly restrained. An FT report this week attested that the EU and UK have a breakthrough in the works with regard to agreeing on Brexit divorcing terms, though doubts remain, and EU’s Juncker said “we’ll see” at the December-4 meeting between May, himself and EU chief Brexit negotiation Barnier, whether sufficient progress has been made to move forward.
The pound has been broadly holding its own versus the major currencies over the last month or two, however there is still the balance of risks being skewed to the downside. In November, GBPJPY has been seen, as one of the few crosses, in which pound presents signs of weakness against yen.
The pair is traded below the 20-Day MA since November 9, while it is seen creating lower highs and lows since then, forming a down-channel. Momentum indicators suggest that bears are still in a control, with RSI and MACD turning to Neutral after peak seen in October, while Stochastic is at 20 presenting that there is still space for the pair to reach the oversold territory.
Therefore, with GBPJPY moving below 50-Day MA but above 200-Day MA, we can claim that in a monthly and even weekly basis there is still a bullish outlook or the cross, however on a Daily basis the pair remains weak. Immidiate support for the particular pair comes at 147.70 area, while resistance is between the 50-Day MA and the last up fractal, at 149.50-149.80.
A break below support, could suggest a retest of October’s low at 146.65. Meanwhile a break above resistance, could suggest that downside momentum has been limited and the pair could be seen back on two months peak, at 151.00-152.00.
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