GBP/JPY Price Analysis: Tanks more than 200 pips on BoJ’s intervention threats
|- Financial Japanese authorities met regarding a weaker JPY and accorded to act if the yen continues weakening.
- Despite falling on threats of an FX intervention by Japan, the GBP/JPY gained 1.30% weekly.
- GBP/JPY Price Analysis: To continue falling towards 164.25 before resuming to the upside.
The GBP/JPY plunged on Friday and trimmed weekly gains of almost 4%, on an announcement by the Ministry of Finance and the Bank of Japan, regarding a weaker yen and said that Japan “will take appropriate measures when necessary while maintaining close communication with the monetary authorities of each country.” At 165.51, the GBP/JPY collapses 1.31% as the New York session winds down.
Japan’s authorities verbal intervention worked; the JPY strengthened
Negative sentiment weighed on global equities. US stocks fall off the cliff recording losses between 2% and 2.80%, as Wall Street head into the weekend. Worries that inflation might last longer than expected despite efforts of global central banks, which tighten monetary policy, kept investors’ flows flying toward safe-haven assets.
In the case of the GBP/JPY, traders braced for safety and booked profits, validating the words from government authorities in Japan. The GBP/JPY seesawed around 168.00 at the beginning of Friday’s Asian session and tumbled on the statement’s release, reaching a daily low of 165.16.
GBP/JPY Price Analysis: Technical outlook
The GBP/JPY retreated from fresh YTD highs printed on June 9 near 168.72 and fled towards the 23.6% Fibonacci retracement, drawn from the May 12 low towards June 9 high. Nevertheless, the GBP/JPY daily chart depicts the pair as upward biased, but Friday’s pullback might extend towards April’s 28 daily high at 164.25.
In the short-term, the GBP/JPY’s 4-hour chart cross probed the 50-simple moving average (SMA) but failed to break below it and bounced shy of the S2 daily pivot point at 165.68. Also, the Relative Strength Index (RSI), albeit in negative territory, shifted upwards, opening the door for a cross over the 50 mid-line.
Upwards, the GBP/JPY would face resistance at the S2 pivot at 165.68. Break above would expose the 166.00 barrier, followed by the S1 pivot level at 166.70. On the flip side, the GBP/JPY first support would be the 50-SMA at 165.05. Once cleared, it would open the door towards the S3 pivot level at 164.67, followed by the 164.00 mark.
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.