GBP/JPY: Navigating Market Fluctuations Amid Economic Signals

The GBP/JPY currency pair pared some of its gains on weak pound sterling. It hits a high of 198.25 and is currently trading around 197.12.Potential Reversal Zone (PRZ) is around 200.20.

Economic Indicators

The S&P Global UK Construction Purchasing Managers' Index fell to 53.3 in December 2024, the lowest since June, when it was 55.2. Though the PMI is still above 50, which is a sign of growth, the construction sector is growing at a slower pace. Housebuilding is the weakest with a score of 47.6, showing a decline. The commercial sector was the best-performing sector with a PMI of 55.0, followed closely by civil engineering at 52.9. New orders have been rising for the third month in succession at a less sharp rate as the high cost of borrowing and deficiency of consumer confidence take their toll. Business optimism is a bit better than November but much weaker than it was at the start of 2024, which makes future spending look pretty uncertain.

Technical Analysis of GBP/JPY

The GBP/JPY pair is trading above 34 and 55 EMA (Short-term) and 200 EMA (long-term) on the 4-hour chart, confirming an overall up trend. Immediate resistance is at 199; a breach above this level could lead to targets of 200.20. Downside support is at 197.30 with additional levels at 196.45/195.75.

Market Indicators

CCI (50)- Bullish

Directional movement index - Neutral

 It is recommended to buy on dips around 197 with a stop-loss at 196 for a TP of 199.90