Today I’m looking at GBP/JPY for a trend continuation opportunity.
Can the pound extend its uptrend against the yen?
Before moving on, ICYMI, I’ve listed the potential economic catalysts that you need to watch out for this week. Check them out before you place your first trades today!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
Rightmove: Prices for UK houses hit record highs in all nations and regions of Britain
Gov Bailey: BOE “will have to act” against inflation
New Zealand dollar higher as inflation surprises, yields jump
China’s GDP growth hits 1-year low as power crunch, bottlenecks choke output
Dollar stands tall vs rivals on firmer yields
European shares dip on inflation worries, weak China data
Upcoming Potential Catalysts on the Economic Calendar:
Canada’s housing starts at 9:00 am GMT
U.S. industrial production at 1:15 pm GMT
BOC’s business outlook survey at 2:30 pm GMT
If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.
What to Watch: GBP/JPY
I don’t see any top-tier economic data scheduled for release but that shouldn’t stop traders who have been pricing in other market themes today.
Bank of England (BOE) officials have been strongly hinting that they’ll soon have to raise rates to combat stronger-than-expected inflation.
On the other side of the pair, the combination of USD/JPY’s strength, higher energy prices (Japan is an energy importer), and a bit of risk appetite have weighed on the safe-haven yen.
I’m looking at GBP/JPY, which has been on a sharp-ish uptrend since the first week of October. See, the pair is trading in a possible flag pattern that could lead to an extension of the 1-hour uptrend.
If traders continue to take risks or push USD/JPY and other yen crosses higher, then GBP/JPY could break above its bullish flag candlestick pattern and extend its uptrend all the way to 160.00 or 162.00.
But if pound bears push for a deeper pullback, or if risk aversion from China’s disappointing economic release sets in, then GBP/JPY could dip to previous areas of interest closer to the 100 SMA.
