GBPJPY, Daily
The GBPJPY has been in a steady uptrend from the August 16 low (below 130.00) to the September 2 high (138.72). That now looks to be fading, following three days of falls followed by a reprieve yesterday. The pair remained below the 23.6 Fib level from the pre Brexit high and although still above the 20 DMA and with positive SAR a SHORT trade was triggered at 136.18. Target 1 is 134.50 and Target 2 132.80. Support at the 50 DMA and psychological 135.00 level will provide resistance to the move lower. The current 14 Day ATR is 1.435.
The UK trade deficit narrowed in July data, with the balance ebbing to a GBP 4.5 bln deficit from GBP 5.6 bln in June. The goods deficit fell to GBP 11.8 bln from GBP 12.4. The Official for National Statistics doesn’t attribute the narrowing in the deficit to post-Brexit vote fall in the pound, which by its trade-weighted calculation of the sterling Exchange Rate Index fell 6.6% in July versus the average level in June and by 15.0% versus July 2015. The stats office highlights studies on the impact of sterling weakness on trade, showing that the sharp declines in the pound in 2008/9 led to import price rising more than export prices, for instance, suggesting that there is no guarantee that a weaker currency will translate into improved net export performance in the UK economy.
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Stuart Cowell
Market Analyst
HotForex
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