22.09.2023 06:49 PM
GBP/JPY Flag pattern

The GBP/JPY pair rebounded in the short term, but this could be only temporary. It's located at 181.63 at the time of writing. The Japanese Yen Futures' short-term drop forced the pair to grow. Technically, the bias remains bearish, so more declines are in cards.

Fundamentally, the BOJ left the Policy Rate at -0.10 as expected, National Core CPI rose by 3.1% beating the 3.0% growth expected, while Flash Manufacturing PMI came in worse than expected. On the other hand, the UK Retail Sales indicator reported only a 0.4% growth versus the 0.5% growth forecasted, while the Flash Manufacturing PMI and Flash Services PMI confirmed contraction.

GBP/JPY bearish bias

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Technically, the price crashed after registering only false breakouts through the downtrend line. After its massive drop, a rebound was natural. The price action developed a flag pattern.

This could represent a bearish continuation formation. The former low of 181.31 represents a key static support.

GBP/JPY outlook

As long as it stays below the downtrend line, the GBP/JPY pair could drop deeper. A new lower low, a bearish closure below 181.31 activates more declines and is seen as a short opportunity.

Ralph Shedler,
Analytical expert of InstaForex
© 2007-2023
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