Exactly one week ago the GBP/JPY opened at 137.932 and closed Friday at 137.902.
Last week’s high was 138.862 and the low 137.188. The reason for indecision is clear – will a Brexit deal finally be reached? It is important to note Thursday had the 137.188 low and moved almost 30 pips higher by Friday to 138.120 before closing the week at 137.902.
News reports were coming out that said an EU and UK deal might be reached within two weeks. The Yen was reasonably strong last week, and if an agreement is not reached, the price will likely drop rather significantly. The consensus though is these Brexit reports are accurate.
If so, the Pound will very likely take off and could reach 140.000. The November 11 high was 140.300, and such positive news will launch the Pound.
Ursula von der Leyen, the European Commission president, said on Friday that “after difficult weeks with very, very slow progress, now we have seen in the last days better progress, more movement on important files.” This is a very positive statement, but remember, there has been Brexit news for the past few years, and although an end is imminent at some point sooner than later, if the rumoured deal is not reached, the Pound will drop. This time around, there is a different feeling, though. Due to the intensity of recent discussions, something appears more optimistic.
Most technical indicators such as the RSI(14), STOCH(9,6), MACD(12,26), and CCI(14) are all not surprisingly in agreement with a BUY signal. The Pound has been inching up in recent trading sessions.
On the D1 chart, we have first initial support of 38.2% Fibonacci at 137.910 with additional supports resting at 137.630 and 137.240. Resistance levels above are not very heavy with the first at 138.230.
What we are seeing is more of a news-related situation versus a technical one regarding the GBP/JPY. If the optimistic reports are indeed true, the Pound will soon have quite a big gain.
GBP/JPY key levels:
Support: 137.63 137.24 137.03
Resistance: 138.23 138.44 138.83