Investors began to be wary of price change signals on the chart of the GBP/JPY currency pair today (Wednesday) after published economic data influenced the movement of the Pound currency.
After the UK economic growth data and the published employment report, the main focus is on the publication of the UK consumer price index data which has just been published at the opening of the European session a while ago.
Based on the reading of the data, the inflation rate in the UK showed a decrease to 9.1% compared to expectations to remain at the level of 10.1%, but still remains at the highest level in 40 years.
However, the Pound began to show a reaction to the depreciation as investors are likely to expect that the central bank of England (BOE) has the potential to slow down aggressive interest rate hikes at a postponed policy meeting next week.
The yen, on the other hand, was seen trading stronger as investors awaited further reports after there were signals that the central bank of Japan (BOJ) may be preparing to intervene directly in the market (intervention).
On the GBP/JPY chart, it can be seen that the price increase made yesterday reached up to the height of 167,600 recording the highest level of 12 weeks.
However, at the end of the New York session, the price dropped back to the concentration level of 166,200 which was previously the price resistance level last week.
Until trading continued in the Asian session this morning, the price that began to move below the barrier level of the Moving Average 50 (MA50) on the 1-hour time frame on the GBP/JPY chart has given an early signal for a bearish movement for the price.
Continuing trading in the European session saw prices plummet after the UK inflation data was published, dropping from the 166.200 level to around 165.00 as of 3pm local time.
With the momentum displayed, the price is likely to test the support level at 164.500 and if that level fails to bounce back like last week's trade, the latest low will be recorded.
A continued decline beyond the 163.500 zone is seen to lead up to the 162.00 zone or even lower at 160.500.
On the other hand, if there is a rebound in prices, the 166,200 level is seen to be a resistance that will be tested again after the price plunged below that level just now.
A further move higher will retest the levels reached yesterday or continue the rise towards the resistance zone at 168.00.
