GBP/JPY steady around 156.40 amid a mixed market sentiment

• GBP/JPY gave back its Tuesday’s gains, as investors flew towards safe-haven assets, the Yen is up.
• Market sentiment has dampened, as robust US Q3 corporate earnings fade, alongside month-end flows.
• UK’s economy expected to grow 6.5% in 2021 – UK’s Office for Budgetary Responsibility.

On Wednesday, the GBP/JPY seesawed at a wide range, dipping down from 157.27 to 155.70, ultimately stabilizing around 156.40 as the Asian session began.

The market sentiment Is mixed as the Asien session kicks in

As the New York session winds down, the market sentiment was mixed, as showed by US stock indices finishing in the red, except for the heavy-tech Nasdaq Composite, which printed gains of 0.25% on the back of Microsoft and Google Alphabet. 

Uncertainties like the US fiscal policy, central bank tightening, and inflationary pressures kept investors uncomfortable, as some safe-haven currencies appreciated in tandem with precious metals. That, in part, boosted the prospects of the Japanese yen, which despite non-important information on its macroeconomic docket, relied on its safe-haven status versus the risk-sensitive British pound.

In the meantime, in the UK, Rishi Sunak, the Chancellor of the Exchequer, presented the Autumn 2021  British budget. Sunak appeared at the Parliament. He said that the British economy would expand by 6.5% in 2021, better than the 4% predicted during COVID-19 lockdowns. Putting this aside, the Office for Budgetary Responsibility (OBR) expects a deficit contraction, to 7.9% of the GDP, from previous forecasts of 10.3%.

GBP/JPY Price Forecast: Technical Outlook

Weekly chart

The weekly chart depicts the GBP/JPY pair is in a solid upward trend portrayed by rising slope weekly simple moving averages (WSMA’s) located beneath the spot price, alongside a test of the February 2, 2018, resistance level at 156.61. Since July, the cross-currency has appreciated 6.50%, and the 100-WSMA is just crossing over the 200-WSMA, adding another bullish sign to the previously mentioned hints.

Furthermore, an upward slope trendline that travels from March 2020 lows under September 2020 lows was unsuccessfully tested by the GBP/JPY pair, which bounced off at 150.00, rallying over 700 pips until finally settling at current levels.

Hence, the pair could be headed towards the upside. However, the lack of recent price action above the 156.00 threshold leaves June 24, 2016, swing highs around 159.20 as the next resistance level.