The British pound continued its decline against the US dollar and the Japanese yen this week. It opened with a monster gap lower, and is trying hard to close the gap especially against the Japanese yen. However, the market sentiment is completely against the British pound buyers. So, I think we should be looking for short-term sell opportunities in the GBP/JPY pair.
There is a crucial resistance around the 171.50-80 levels, as can be seen in the chart below. The mentioned levels are also around the gap close area. So, if the pair climbs a bit higher from the current levels in the form of correction, makes a stop around the mentioned levels and forms a bearish divergence, then we can enter into a sell trade.
Initial target should be around the 169.50 level, and final target could be around the 168.50 level. Stop should be placed above the 200 moving average on the one-hour chart.
Reviewing yesterday’s events and trades
Yesterday, the US dollar again gained traction against almost all other major currencies. The Forex market sentiment was the major driver yesterday, as there was no critical economic release lined up during the NY session in the US. The GBP/USD pair is turning out to be one of the biggest losers, as the Scottish independence fear is still playing on the minds of the investors. The pair broke the 1.6100 level recently, and it looks like it might be heading lower in the short term, but the chance of a pullback is also increasing as we move ahead.
Fundamental Outlook for the day
Today, the market is likely to continue trading according to the Forex sentiment, as there is no major release during the NY session in the US. One of the low-risk events lined up is the US JOLTs openings data, which is unlikely to cause swig moves in the US dollar. Later during the next Asian session, the Australia’s Westpac consumer sentiment will be released, which might cause some moves in the Australian dollar which is trading lower against the US dollar.