GBP/JPY Price Analysis: The pound retreats to test support at 137

GBP/JPY Price Analysis: The pound retreats to test support at 137.80

  • GBP/JPY unable to break above 138.20, retreats to support area at 137.70/80
  • The sterling fails to take advantage of the positive market sentiment.

The sterling is pushing lower during the late US trading session, after having failed to extend beyond 138.20 area. The pair has broken through the bottom of the last two days’ trading range to test support area at 137.70/80.

The positive market mood regarding the Brexit negotiations, which has buoyed the GBP higher against the euro and the USD has been unable to provide a significant impulse to the GBP/JPY. The pair has remained capped below 138.00 for most of the day.

The pound has traded higher against most of its peers on Wednesday on amid hopes of an imminent trade deal with the EU. The exit of top UK Government advisor and key Brexit supporter, Dominique Cummings, and a more positive tone from the negotiators have boosted hopes that there is still time to avoid an unorderly exit from the EU.

Technical indicators on the daily chart show the pair losing momentum, right above 137.70/80 support area (November 16, 17 lows and October 9, 12 and 13 highs). A confirmation below here would increase bearish pressure on the pound driving the pair towards the 50-day SMA, at 136.45 ahead of 135.10 (November 5 low).

On the upside, the pair should breach 138.40 (November  17 high) to regain bullish traction and confirm above 138.85 (November 16 high) before aiming to a retest of 140.30 (November 11 high).

GBP/JPY daily chart

GBP JPY 637413341510056836

Technical levels to watch

Credit: FX Street

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