GBP/JPY Price Forecast: Falling 20-day EMA supports downside bias
- GBP/JPY falls to near 208.80 as the JPY gains, following the US SC’s verdict against Trump’s tariff policy.
- Upbeat UK Retail Sales and S&P Global PMI data have strengthened the Pound Sterling.
- Investors await BoE Taylor’s comments for fresh cues on the UK interest rate outlook.
The GBP/JPY pair is down 0.11% to near 208.80 during the European trading session on Monday. The cross faces selling pressure as the United States (US) Supreme Court ruling against President Donald Trump’s tariff policy has improved the safe-haven demand of the Japanese Yen (JPY).
In addition to the risk-off trade, market expectations that the Bank of Japan (BoJ) could raise interest rates in the near term are also keeping the JPY on the front foot.
Meanwhile, the Pound Sterling (GBP) trades broadly firm due to upbeat United Kingdom (UK) Retail Sales data for January and the flash S&P Global Purchasing Managers’ Index (PMI) data for February. The data showed on Friday that UK Retail Sales, a key measure of consumer spending, unexpectedly rose 1.8% month-on-month (MoM) from 0.4% in December.
The UK’s Composite PMI unexpectedly arrived higher at 53.9 from 53.7 in January, while it was expected to drop to 53.4.
In Monday’s session, investors will focus on comments from Bank of England (BoE) Monetary Policy Committee (MPC) member Alan Taylor in a fireside chat at Deutsche Bank. Investors will closely monitor Taylor’s comments for fresh cues on the UK interest rate outlook. It is worth remembering that Alan Taylor was one of four MPC members who voted to cut interest rates by 25 basis points (bps).
GBP/JPY technical analysis
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GBP/JPY trades lower at around 208.80 at the press time. Price sits beneath a declining 20-day Exponential Moving Average at 210.18, maintaining a downside tilt.
The 14-day Relative Strength Index (RSI) rebounds above 40.00 after sliding in the 20.00-40.00 range, signifying weakening of bearish momentum. However, the broader trend still remains negative.
The rolling slope of the 20-day EMA underscores supply on rebounds. On the downside, the pair could slide towards the December 5 low of 206.20 if it fails to hold the February 17 low of 207.24.
(The technical analysis of this story was written with the help of an AI tool.)
Economic Indicator
BoE's Taylor speech
Alan Taylor became an external member of the Bank of England's (BoE) Monetary Policy Committee (MPC) in September 2024. Taylor, who was appointed for a three-year term, is an economist and Professor of International and Public Affairs at Columbia University. He has served as a senior advisor at Morgan Stanley, PIMCO and Mckinsey. He is a research associate of the National Bureu of Economic Research and is a research fellow of the Centre for Economic Policy Research.
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Source: Bank of England
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