The GBP/JPY showed a minor pullback after strong UK CPI data. It hit an intraday high of 199.43 and is currently trading around 199.25. Intraday trend is bearish as long as the resistance at 200.28 holds.
Driven by a 0.1% monthly increase instead of an expected decrease, UK consumer price inflation quickened to 3.8% year-on-year in July, exceeding estimates and registering the highest rate in 18 months. Fresh vegetables and beverages propelled the surge in services and food, with airline costs up 30.2%, gasoline and marine prices growing, and food and non-alcoholic drinks up 4.9%, while hotel rates pushed services inflation to 3.4%. Although housing-related inflation somewhat decreased from 6.7% to 6.2%, sticky service inflation and a near-4% headline CPI point to the Bank of England stalling further rate cuts. Economists project that inflation may reach 3.5% by year-end, but continuing wage growth and erratic travel and food prices might keep pressure on household incomes; therefore, policymakers should proceed with care.
The pair is trading above 55 and 200 EMA and 365 EMA (long-term) on the 4-hour chart, confirming a bearish trend. Any violation below 198.60 indicates the intraday trend is weak. A dip to 197.75/196.70/196.20/195.is possible. Immediate resistance is at 200.30 a breach above this level targets of 202/202.98.
Market Indicators ( 4-hour chart)
CCI (50)- Bearish
Directional movement index - Neutral
Trading Strategy: Buy
It Is good to buy above 200.28 with SL around 199.70 for a TP of 202/202.98
