Stagflation Worries Weigh on GBP/JPY: A Downward Outlook

The GBP/JPY traded weak for the past three weeks and lost more than 800 pips on board-based Pound weakness. It hit a low of 189.33 and is currently trading around 190.51. Intraday trend is bearish as long as resistance 192 holds.

The UK stands in danger of stagflation- high inflationary pressure without, or even low, economic growth. The inflation numbers came in the books just last week as they cooled off to 2.5%, well from a year earlier's report though below quite many expected figures. Such miserable news sees depreciation in the GBP British Pound.

Technical Analysis of GBP/JPY

The GBP/JPY pair is trading below 34 and 55 EMA (Short-term) and 200 EMA (long-term) on the 4-hour chart, confirming an overall downtrend. Immediate resistance is at 190.20; a breach above this level targets of 190.60/191/191.60/192/193/193.51/194.52/195/195.60/196.25/197. Downside support is at 189.40 with additional levels at 188.70/188.

Market Indicators

CCI (50)- Bearish

Directional movement index - Bearish

 It is recommended to sell on rallies around 190.75-80 with a stop-loss at 191.75 for a TP of 188.