GBP/JPY – psychological support of 130.00 intact… for now

Yen buying gathered pace in Asia, pushing the GBP/JPY cross lower, however, losses were capped around 130.00 levels.

Mon pol differential favors Yen

BOJ’s exhaustion at a time when the Fed is reluctant to even drop subtle hints of next rate hike makes the Japanese Yen a winner; more so because the Bank of England is expected to cut rates further and expand more QE if required.

Consequently, the support at 130.00 could be at risk of being breached. The cross could witness a revival/breakdown today depending on the quality of the UK retail sales report for July due later today. The pair was last seen trading around 130.40 levels.

GBP/JPY Technical Levels

A break above immediate hurdle at 130.63 (5-DMA) would open doors for a test of 131.58 (10-DMA) above which the cross could target 132.53 (Aug 12 high). On the other hand, a breakdown of support at 130.00 could yield a move to 129.07 (Aug 16 low) – 128.60 (July 6 low).