GBP/JPY advances despite BoE’s dovishness, steady around the 153.00 figure

• GBP/JPY begins on the right foot the Asian session, up 0.03%.
• The Japanese GDP contracts more than the -0.2% expected.
• GBP/JPY focus turns to UK’s employment figures, to be unveiled on Tuesday.

The British pound extends its two-day gains, up some 0.03% as the Asian session begins, trading at 153.08 at the time of writing. Overall, market sentiment is downbeat. Major US Stock indices finished in the red, losing between 0.01% and 0.64%. Furthermore, the third quarter’s weaker than expected Japanese GDP dragged the Japanese yen lower amid risk-on market mood.

Japan Gross Domestic Product (GDP) for the third quarter, shrank

On Monday, the Japanese economic docket featured the GDP for the Q3, which shrank 0.8%, more than the -0.2% expected by analysts, according to preliminary data released by the Cabinet Office. That curtailed the government’s anticipation of a rebound to a pre-pandemic level by year-end.

Japanese data blamed the resurgence of new COVID-19 cases, which spurred lockdowns across 21 prefectures, out of 47, asking people to stay at home, and restaurants and bars closed early to refrain from serving alcohol. Also, the car industry was affected by the chip shortage, forcing automakers to cut output around the summer.

In the meantime, UK’s prime minister Boris Johnson crossed the wires. He said that he is ready to trigger Article 16, despite continuing negotiations with the EU. Also, he added that an agreement is still possible while he hopes to negotiate a settlement with Northern Ireland.

On Tuesday, a light Japanese economic docket would leave the GBP/JPY pair dynamics in the hands of the British pound. Concerning the UK economic docket, employment figures could offer fresh impetus for traders, as the October report would be the first one without the furlough scheme provided for workers in the UK.

GBP/JPY Price Forecast: Technical outlook

The daily chart depicts the GBP/JPY pair rebounded from the 100-day moving average (DMA), keeping its upward bias intact, with the 50-DMA at 153.31 and the 100-DMA at 152.63. Further, the 200-DMA lies well below the spot price. Furthermore, the GBP/JPY reclaimed the bottom of a descending channel broken two days before, leaving the 154.50-60 area as resistance.

However, to resume the upward bias, British pound buyers will need a daily close above the 50-DMA. In that outcome, the first supply area would be the psychological 154.00. A breach of the latter would expose the top-trendline of the descending channel around the 154.50-60 region.

On the flip side, failure at the 50-DMA would expose the confluence of the bottom-trendline of the descending channel and the 200-DMA around the  152.00-50 range.