- Pound collects the market's flow as optimism grows for a faster UK economic recovery.
- GBP/JPY longer-term technical analysis remains bearish.
GBP/JPY has rallied on the day as the US dollar proves to be well and truly out of favour at the start of the week as the pound collects the market's bid.
At the time of writing, the cable is trading at 1.3985 having travelled between a low of 1.3809 and a high of 1.3992.
The cross is trading at 151.20 and up 0.5%.
DXY is down 0.55% despite a bid in the US ten-year yield which is stabilising from the weekly support.
However, sterling is the market's favourite and the poster child for a post covid world in the forex space.
Data over the weekend showed Britain had recorded just 10 COVID-19 deaths in a day, its lowest since September.
Forecasters expect that additional easing of lockdown restrictions will see the UK economy first out of the block on economic recovery expectations due to a fast roll-out of vaccinations against COVID-19 across Britain.
Moreover, the dwindling expectations of negative interest rates at The Old Lady as well as a Brexit trade deal with the EU have supported such a notion in recent weeks.
Also, encouragingly for the pound, data from CFTC showed that speculators' net long futures positions in cable have rebounded in the week to April 13 after dropping to the lowest since February in the previous week.
The week ahead
It is the start of a data-heavy week and investors are anticipating that it will provide extra evidence that the UK's economy is rebounding from its deepest recession in 300 years.
March Consumer Price Index on Wednesday is expected to bounce back from February's low reading.
On Friday, the focus will turn to the April PMI Services.
Given the optimism about reopening, the reading is expected to be encouraging.
Before then, the focus will also be on Jobs data (Tue) and Retail Sales (Fri).
The question is whether the dollar can continue its decline even in the face of stabilising US yields.
GBP/USD technical analysis
1.4000 is an important level vs the US dollar, but we may see the bottom of 1.39 before enough demand will commit to such a feat given there has been no meaningful offer this month so far:
GBP/JPY technical analysis
However, regardless of whether 1.40+ is achieved or not, a downside correction would be expected in due course from within the supply zone which would equate to downside risk in GBP/JPY.
As per the prior analysis and laws of gravity (overextended monthly and weekly trend), GBP/JPY Price Analysis: Bears in control, target significant downside levels, the path of least resistance while below 151.35 is to the downside:
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD extends gains above 1.0700, focus on key US data
EUR/USD meets fresh demand and rises toward 1.0750 in the European session on Thursday. Renewed US Dollar weakness offsets the risk-off market environment, supporting the pair ahead of the key US GDP and PCE inflation data.
USD/JPY keeps pushing higher, eyes 156.00 ahead of US GDP data
USD/JPY keeps breaking into its highest chart territory since June of 1990 early Thursday, recapturing 155.50 for the first time in 34 years as the Japanese Yen remains vulnerable, despite looming intervention risks. The focus shifts to Thursday's US GDP report and the BoJ decision on Friday.
Gold closes below key $2,318 support, US GDP holds the key
Gold price is breathing a sigh of relief early Thursday after testing offers near $2,315 once again. Broad risk-aversion seems to be helping Gold find a floor, as traders refrain from placing any fresh directional bets on the bright metal ahead of the preliminary reading of the US first-quarter GDP due later on Thursday.
Injective price weakness persists despite over 5.9 million INJ tokens burned
Injective price is trading with a bearish bias, stuck in the lower section of the market range. The bearish outlook abounds despite the network's deflationary efforts to pump the price.
US Q1 GDP Preview: Economic growth set to remain firm in, albeit easing from Q4
The United States Gross Domestic Product (GDP) is seen expanding at an annualized rate of 2.5% in Q1. The current resilience of the US economy bolsters the case for a soft landing.