Forex Market: GBP/JPY daily trading forecast

Yesterday’s trade saw GBP/JPY within the range of 193.46-195.35. The pair closed at 194.83, surging 0.50% on a daily basis, or the most considerable daily gain since August 10th, when it appreciated 0.91%. The daily high has also been the highest level since June 24th, when the cross registered a high of 195.93.

At 9:01 GMT today GBP/JPY was down 0.02% for the day to trade at 194.81. The pair touched a daily low at 194.65 at 4:01 GMT.

Japanese exports expand above expectations

Total exports in Japan were reported to have increased at an annual rate of 7.6% in July, which outstripped the median forecast by experts pointing to a 5.5% gain. However, Julys rate was slower compared to that reported a month ago (9.5%), which suggested that weaker international demand would probably not provide a strong enough impulse, so that Japans economy could recover from the Q2 contraction.

Total imports dropped at a lesser annual rate than anticipated in July, or 3.2% instead of 7.9%.

As a result, the countrys trade balance produced a larger-than-projected deficit last month (JPY 268.1 billion instead of JPY 56.7 billion). It has been the most significant deficit since February 2015, when a trade gap of JPY 424.6 billion was reported.

Bond Yield Spread

The yield on Japanese 2-year government bonds went as high as 0.008% on August 18th, after which it slid to 0.005% at the close to lose 0.002 percentage point on a daily basis.

The yield on UK 2-year government bonds climbed as high as 0.626% on August 18th, or the highest level since August 10th (0.648%), after which it closed at the exact same level to gain 7.1 basis points (0.071 percentage point) for the day.

The spread between 2-year UK and 2-year Japanese bond yields, which reflects the flow of funds in a short term, expanded to 0.621% on August 18th from 0.548% during the prior day. The August 18th yield difference has been the most considerable one since August 5th, when the spread was 0.648%.

Meanwhile, the yield on Japan’s 10-year government bonds soared as high as 0.395% on August 18th, after which it closed at the same level to remain unchanged compared to August 17th.

The yield on UK 10-year government bonds climbed as high as 1.890% on August 18th, or the highest level since August 14th (1.906%), after which it slipped to 1.872% at the close to add 5.1 basis points (0.051 percentage point) on a daily basis.

The spread between 10-year UK and 10-year Japanese bond yields widened to 1.477% on August 18th from 1.426% during the prior day. The August 18th yield difference has been the largest one since August 14th, when the spread was 1.499%.

Daily and Weekly Pivot Levels

By employing the Camarilla calculation method, the daily pivot levels for GBP/JPY are presented as follows:

R1 – 195.00
R2 – 195.18
R3 (range resistance – green on the 1-hour chart) – 195.35
R4 (range breakout – red on the 1-hour chart) – 195.87

S1 – 194.66
S2 – 194.48
S3 (range support – green on the 1-hour chart) – 194.31
S4 (range breakout – red on the 1-hour chart) – 193.79

By using the traditional method of calculation, the weekly pivot levels for GBP/JPY are presented as follows:

Central Pivot Point – 193.91
R1 – 195.61
R2 – 196.75
R3 – 198.45

S1 – 192.77
S2 – 191.07
S3 – 189.93