GBP/JPY breaking ascending support

FXStreet (Guatemala) - GBP/JPY is trading at 171.44, down -0.48% on the day, having posted a daily high at 172.36 and low at 171.35.

GBP/JPY has come a long way its bullish trajectory and has broken the ascending support line with plenty of conviction. Meanwhile, however, Jacqui Douglas, Senior Global Strategist at TD Securities noted that the industrial production report was exactly in line with consensus with both headline IP and manufacturing production up 0.4% M/M in April. “Combined with the gains in March, this sets up Q2 for another decent quarter of manufacturing expansion, and the Y/Y pace of growth is now at its highest since early 2011. This is all despite the appreciation in GBP over the last year, as stronger demand from the Eurozone has clearly been the bigger factor here. The BoE also released its quarterly mortgage statistics this morning, and it’s worth noting that mortgage debt outstanding expanded by just 0.4% Q/Q in Q1. A pace of expansion of <2% annualized should hardly be ringing the alarm bells with the FPC over fears of a credit bubble”.

MPC to shift?

Meanwhile, Analysts at RBS explained that there remains considerable uncertainty on the level of slack in the labour market, and that uncertainty should continue to fuel concern among market participants that the MPC may shift away from its dovish consensus sooner. “We anticipate the GBP should become more sensitive to individual MPC speakers for signs of discomfort – MPC member Broadbent is scheduled to testify to Parliament tomorrow”.

GBP/JPY Levels

With spot trading at 171.46, we can see next resistance ahead at 171.57 (Daily 20 SMA), 171.69 (Weekly Low), 171.72 (Daily Classic S2), 171.73 (Weekly Classic PP) and 171.79 (Hourly 20 EMA). Support below can be found at 171.45 (Hourly 200 SMA), 171.44 (Daily Classic S3), 171.35 (Daily Low), 170.91 (Weekly Classic S1) and 170.69 (Daily 100 SMA).