GBPJPY Hits Resistance and Could Be a Short Opportunity

Summary:

The GBPJPY has ralled over the last two weeks to test resistance levels but today's selling ahead of employment data could be a sell opportunity.

The GBPJPY has ralled over the last two weeks to test resistance levels but today’s selling ahead of employment data could be a sell opportunity. The pound has gained strength from progress in Brexit talks, with the hope of another extension into November. The pair has also gained from continued strength in global stock markets due to the Yen’s status as a safe haven currency.

Tomorrow brings unemployment data from the U.K. with analysts expecting a gloomy -30k jobs compared to last month’s -12k figure. The outlook for jobs in the nation has worsened in the last week after the closure of Cineworld’s cinema theatre chain. The group employs 5,500 people and highlights growing fears for the U.K. economy.

Unemployment in the United Kingdom is currently 4.1% with Japan at 3% and that gap will widen tomorrow, and potentially in the weeks or months ahead. This type of dynamic puts any future pound rallies at risk.

On the Brexit front, Boris Johnson’s threat to walk away from talks by October 15th looks to have been some gamesmanship with the markets expecting the talks to extend further into November. A french ministry official made comments on this development yesterday.

GBPJPY Technical Outlook

The GBPJPY rallied through the resistance level I marked over the last week and tested the 50-day moving average. The close today could determine the next path. A bearish close could see a move back towards the 134.00 level and this could be a good trade with a stop loss at 138.00. The Investing Cube team is currently available to assist all levels of traders with a Forex Trading Course or one-to-one coaching.