Forex Market: GBP/JPY daily trading forecast

Yesterday’s trade saw GBP/JPY within the range of 186.02-190.04. The pair closed at 186.47, falling 0.18% on a daily basis and extending the string of consecutive daily losses to five. On Monday the cross went down as low as 183.61, or the lowest level since May 8th, when a daily low of 182.48 was recorded.

At 8:24 GMT today GBP/JPY was up 0.53% for the day to trade at 187.44. The pair touched a daily high at 188.10 at 5:20 GMT.

Today the cross may be influenced by a number of macroeconomic reports as listed below.

Fundamentals

United Kingdom

BBA Home Loans

The number of home loans in the United Kingdom, issued by the British Bankers’ Association (BBA), probably increased to 46 000 in July, according to market expectations, from 44 488 in June. If so, this would be the highest number of home loans since February 2014, when 47 600 loans were issued. The BBA features the major banks in the country, which account for almost 60% of overall mortgage lending. The number of mortgage loans is considered as a leading indicator in regard to UK housing market conditions. As growth in mortgage lending signifies a healthy housing sector, which also contributes to overall economic activity, in case the number of loans rose more than projected, this would boost demand for the sterling. The BBA is to publish the official figure at 8:30 GMT.

Bond Yield Spread

The yield on Japanese 2-year government bonds went as high as 0.011% on August 25th, or the highest level since August 11th (0.013%), after which it slid to 0.006% at the close to show no change for a third straight trading day.

The yield on UK 2-year government bonds climbed as high as 0.731% on August 25th, or the highest level in more than six months, after which it fell to 0.717% at the close to add 21.4 basis points (0.214 percentage point) compared to August 24th, while marking a second consecutive trading day of gains.

The spread between 2-year UK and 2-year Japanese bond yields, which reflects the flow of funds in a short term, expanded to 0.711% on August 25th from 0.497% on August 24th. The August 25th yield difference has been the most considerable one in at least five months.

Meanwhile, the yield on Japan’s 10-year government bonds soared as high as 0.384% on August 25th, or the highest level since August 18th (0.392%), after which it slid to 0.351% at the close to lose 0.001 percentage point compared to August 24th, while marking a fourth consecutive trading day of decline.

The yield on UK 10-year government bonds climbed as high as 1.921% on August 25th, or the highest level since August 10th (1.931%), after which it slipped to 1.917% at the close to add 12.2 basis points (0.122 percentage point) compared to August 24th. It has been the first gain in the past five trading days.

The spread between 10-year UK and 10-year Japanese bond yields widened to 1.566% on August 25th from 1.443% on August 24th. The August 25th yield difference has been the largest one since August 5th, when the spread was 1.584%.

Daily and Weekly Pivot Levels

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

R1 – 186.84
R2 – 187.21
R3 (range resistance – green on the 30-minute chart) – 187.58
R4 (range breakout – red on the 30-minute chart) – 188.68

S1 – 186.10
S2 – 185.73
S3 (range support – green on the 30-minute chart) – 185.36
S4 (range breakout – red on the 30-minute chart) – 184.26

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

Central Pivot Point – 192.71
R1 – 194.14
R2 – 196.75
R3 – 198.18

S1 – 190.10
S2 – 188.67
S3 – 186.06