The GBP/JPY currency pair showed a minor sell-off on the strong yen. It hit a low of 190.33 at the time of writing and is currently trading around 190.76. The Potential Reversal Zone (PRZ) is set at 200.20.
Tokyo's Consumer Price Index (CPI) for November 2024 rose to 2.6% year-over-year, up from 1.8% in October, driven by the end of government energy subsidies and rising food prices. The core CPI, excluding fresh food, is 2.2%, also higher than the previous month and above expectations. In response to the inflation data, the Japanese yen strengthened against the US dollar, indicating market speculation that the Bank of Japan (BoJ) may raise interest rates. The BoJ's meeting on December 19 will be critical, as economists anticipate a potential rate hike due to persistent inflation above the target. Overall, these CPI results suggest increasing inflationary pressures that could impact Japan's economic policies.
Technical Overview
The GBP/JPY is trading below both short-term and long-term moving averages, which suggests a major downtrend. The immediate resistance level is at 191.20. If the price breaks this level, it could rise toward 191.70/192/193/193.35/193.80/194.15/194.65/195. Support is at 191.75 and if that fails, the price could drop to 191.75/190.65/190/189.75/188.31.
Indicator Analysis
The CCI and ADX indicators suggest a bearish trend.
Trading Recommendation:
Consider selling on rallies around 191.48-50 with SL around 192.60 for a target price of 188.55.
