GBP/JPY Breaks Through 157.00 Level ahead of UK Manufacturing Data

GBP/JPY Breaks Through 157.00 Level ahead of UK Manufacturing Data

11 May 2016, 10:45
Roberto Jacobs
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GBP/JPY Breaks Through 157.00 Level ahead of UK Manufacturing Data

The GBP/JPY pair's reversal from 158.00 handle gained momentum, dragging the pair back below 157.00 level just ahead of the UK manufacturing and industrial production data.

Since the beginning of this week, the pair had witnessed a sharp recovery of nearly 400-pips from last week's low of 153.86. The recovery momentum now seems to face some fresh supply near 158.00 level on broad safe-haven buying of the Japanese currency, Yen.

The ongoing concerns over the 'Brexit' coupled with the recent disappointing PMI reading seems to force traders to unwind their GBP long bets in expectations of a yet another weak print. However, should there be a positive surprise, GBP pairs, including the GBP/JPY pair, are likely to witness an immediate recovery.

Technical levels to watch

The pair is reversing from the vicinity of 50-day SMA and has now dropped below 20-day SMA support near 157.10-157.00 handle. A disappointing production data is likely to drag the pair back towards 156.00 level, coinciding with 10-day SMA. A follow through selling would negate possibilities of any further recovery, making the pair vulnerable to head back towards testing its recent lows support below 155.00 psychological mark (154.85-80 zone).

Conversely, stronger UK data could lift the pair back above 157.00 mark and if the pair manages to sustain its strength above 157.00, it seems more likely to move back towards reclaiming 158.00 handle and eventually test 50-day SMA resistance near 158.45-50 region.


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