- GBP/JPY posts lower low, signaling more weakness ahead
- Sellers will watch for a break below 205.75–207.00 to drive prices lower
slid to a two-month low of 207.62 early on Thursday after data came in softer than expected. The expanded by 1.0% y/y and 0.1% q/q, missing forecasts of 1.2% and 0.2%, respectively, as a mild growth in services failed to offset declines in other sectors.
The bearish extension below the 50-day simple moving average (SMA) has resulted in a lower low beneath the 210 mark, strengthening concerns that additional weakness could follow. The momentum indicators reinforce the bearish outlook, with the MACD falling into negative territory, and the RSI decelerating below its 50 neutral mark, though the stochastic oscillator is entering the oversold region below 20, suggesting a turning point might be in short distance.
The 23.6% Fibonacci retracement level of the April-February uptrend is currently providing support near 207.70, while key support trendlines drawn from April’s lows lie within close range and are intersecting the 205.75–207.00 zone. Therefore, the bears must break below this floor to activate fresh selling towards the 38.2% Fibonacci retracement at 203.25 and potentially down to the 200-day SMA near 202.00.
On the upside, if the 207.70 floor holds, the bulls may attempt to reclaim the 50-day SMA around 210.70. Then, a move above the 20-day SMA at 211.90 could strengthen buying interest towards the 18-year high of 214.99 and possibly up to the upper band of the broad bullish channel seen near 216.50.
In a nutshell, the short-term bias for GBP/JPY remains tilted to the downside, flagging more losses ahead unless the key support trendlines passing through 205.75 and 207.00 prove firm.
