Short- and Medium-Term Analysis of the Pound-Yen Pair

The Pound-Yen Pair at the Fundamental Level

During recent trading sessions, the British currency has found support thanks to strong economic data and easing financial concerns.

British Prime Minister Andy Burnham also stated last Friday that his government’s first annual budget statement, scheduled for release next week, will give businesses breathing room to grow.

Paul Dales, chief UK economist at Capital Economics, said, “Purchasing Managers’ Index (PMI) readings appear more positive compared to recent retail sales and consumer confidence data.”

He added: “Overall, the economy still appears capable of weathering rising energy prices and high borrowing costs, even though inflation has not yet peaked.”

On the Japanese economic front, we are awaiting this week’s interest rate decision, with expectations that the rate will remain steady at 1.25%.

GBP/JPY from a Technical Perspective

The GBP/JPY pair retreated during Monday’s trading to near the 209.75 level.

The pair is attempting to form the right shoulder of an inverted head-and-shoulders pattern on the hourly chart.

The best buy levels for the pair are near current levels down to 209.40, especially if it rebounds from there with reversal candles.

Alternatively, wait for a break above 210.50 and, consequently, a break above the pattern’s neckline

in that case, we target 211.40 as an initial target, followed by 213.50 near the downtrend line on the daily chart.

This scenario would fail if prices break below 208.80.