Yesterday’s trade saw GBP/JPY within the range of 191.38-193.26. The pair closed at 192.91, rising 0.60% on a daily basis, or the most considerable daily gain since July 14th, when it appreciated 0.90%. The daily high has also been the highest level since July 23rd, when the cross registered a high of 193.97.
At 7:37 GMT today GBP/JPY was down 0.02% for the day to trade at 192.90. The pair touched a daily low at 192.58 at 5:45 GMT.
Today the cross may be influenced by a number of macroeconomic reports as listed below.
Fundamentals
United Kingdom
Consumer credit, Mortgage Approvals
Consumer credit in the United Kingdom probably was at the amount of GBP 1.100 billion in June, up from GBP 1.001 billion in May. The latter has been the lowest amount since February 2015, when consumer lending was valued at GBP 0.740 billion. It represents borrowing by the UK personal sector (individuals only) to fund current expenditures on goods and services, which are a driving force behind economic growth. Within a booming economy, however, excessively high levels of consumer lending may be taken as an indication that economy itself is set to overheat. It is so, because individuals tend to borrow money in order to live beyond their means. Within a sluggish economy, in case lending to individuals expanded more than projected, this would usually have a bullish effect on the pound. Bank of England (BoE) is to release the official data at 8:30 GMT.
The number of mortgage approvals in the United Kingdom probably reached 66 000 in June, according to experts’ expectations, up from 64 434 during the prior month. Mortgage approvals are considered as a leading indicator, reflecting the health of the country’s housing market. In case the number of mortgage approvals increased more than anticipated, this would imply potentially higher demand in the nations housing sector and, respectively, a positive impulse for overall economy. Therefore, the national currency would also be supported. Bank of England will release the official numbers at 8:30 GMT.
Japan
Industrial Output
The preliminary estimate of the index of industrial production in Japan probably showed a 0.3% expansion in June compared to a month ago, following a 2.1% drop in May, according to final data released on July 13th. The latter has been the sharpest monthly decline since February, when production shrank at a pace of 3.1%.
Annualized industrial output contracted at a pace of 3.9% in May, according to final data, or the most since June 2013, when production dropped at an annualized rate of 4.6%.
The index, reflecting business cycle, measures the change in overall inflation-adjusted value of output in sectors such as manufacturing, mining and utilities. In case industrial output expanded more than anticipated, this would provide a moderate support to the Japanese yen. The Ministry of Economy, Trade and Industry is to publish the official industrial data at 23:50 GMT.
Bond Yield Spread
The yield on Japanese 2-year government bonds went as high as 0.010% on July 28th, or the highest level since July 23rd (0.010%), after which it closed at the same level to gain 0.004 percentage point on a daily basis.
The yield on UK 2-year government bonds climbed as high as 0.641% on July 28th, or the highest level since July 24th (0.646%), after which it fell to 0.608% at the close to lose 0.001 percentage point for the day, while marking a third consecutive day of decrease.
The spread between 2-year UK and 2-year Japanese bond yields, which reflects the flow of funds in a short term, narrowed to 0.598% on July 28th from 0.603% during the prior day. The July 28th difference has been the lowest one since July 16th, when the yield spread was 0.598%.
Meanwhile, the yield on Japans 10-year government bonds soared as high as 0.412% on July 28th, after which it slid to 0.410% at the close to lose 0.002 percentage point compared to July 27th, while marking a third straight day of decline.
The yield on UK 10-year government bonds climbed as high as 1.992% on July 28th, or the highest level since July 23rd (2.041%), after which it slipped to 1.948% at the close to add 1.4 basis points (0.014 percentage point) on a daily basis. 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 1.538% on July 28th from 1.522% during the prior day. The July 28th yield difference has been the largest one since July 23rd, when the spread was 1.579%.
Pivot Points (traditional method)
According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 192.52. In case GBP/JPY manages to breach the first resistance level at 193.65, it will probably continue up to test 194.40. In case the second key resistance is broken, the pair will probably attempt to advance to 195.53.
If GBP/JPY manages to breach the first key support at 191.77, it will probably continue to slide and test 190.64. With this second key support broken, the movement to the downside will probably continue to 189.89.
The mid-Pivot levels for today are as follows: M1 – 190.27, M2 – 191.21, M3 – 192.15, M4 – 193.09, M5 – 194.03, M6 – 194.97.
In weekly terms, the central pivot point is at 192.58. The three key resistance levels are as follows: R1 – 193.55, R2 – 195.02, R3 – 195.99. The three key support levels are: S1 – 191.11, S2 – 190.14, S3 – 188.67.