Halister News

(Bloomberg) -- GBP bulls may find more solace vs JPY as technical deterioration on latter (cloud breakouts on x/jpy) may curtail sustained GBP/JPY downside; pair has seen its first bullish alignment in 13-EMA and MACD histogram since late August, Bloomberg technical analyst Sejul Gokal writes.

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RATES OBSERVATION (see chart):

• Investors should watch the U.K.-Japan 10y real yield spread, which has influenced GBP/JPY movements more significantly, as nominal yield spreads diverge since late Sept. (spike in U.K. 10y b/e inflations amid pound slump driving down U.K. real yields)
  • Narrowing of current negative real-yield spread (less in favor of Japan) could help boost GBP/JPY in line with constructive technicals

• GBP/JPY: Convincing bull session yday above ichimoku conv. line and 13-DMA, and turn in Elder Impulse System to ‘green’ (13- EMA, MACD histogram rising together) alleviate downside risks for now; with 9-day RSI at ~48, scope for a squeeze higher toward 21-DMA at 132.65 and then 55-DMA at 133.69 (see LIVE chart)
  • Daily view: Bullish
  • Daily range: Current move 58 pips vs 134 expected (10- day average true range)
  • Resistance: 132.65; 133.27; 133.69; 134.48
  • Spot: 131.82
  • Support: 131.46; 130.51

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• NOTE: Sejul Gokal is an FX strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.