Forex Market: GBP/JPY daily trading forecast

Yesterday’s trade saw GBP/JPY within the range of 192.58-194.17. The pair closed at 193.35, surging 0.23% on a daily basis and extending gains from Tuesday. The daily high has been the highest level since July 17th, when the cross registered a high of 194.38.

At 12:54 GMT today GBP/JPY was up 0.49% for the day to trade at 194.23. The pair overcame the key range breakout level (R4) and touched a daily high at 194.53 at 12:30 GMT. It has been the highest level since June 26th, when a daily high of 195.28 was reached.

No relevant macroeconomic reports are scheduled to be released from the United Kingdom and Japan today.

Bond Yield Spread

The yield on Japanese 2-year government bonds went as high as 0.013% on July 29th, or the highest level since July 22nd (0.014%), after which it slid to 0.010% at the close to gain 0.004 percentage point on a daily basis, while marking the first gain in the past six trading days.

The yield on UK 2-year government bonds went as high as 0.633% on July 29th, after which it slid to 0.612% at the close to gain 1 basis point (0.01 percentage point) on a daily basis, or the first gain in the past four trading days.

The spread between 2-year UK and 2-year Japanese bond yields, which reflects the flow of funds in a short term, narrowed to 0.602% on July 29th from 0.605% during the prior day. The July 29th difference has been the lowest one since July 27th, when the yield spread was 0.599%.

Meanwhile, the yield on Japan’s 10-year government bonds soared as high as 0.416% on July 29th, or the highest level since July 27th (0.419%), after which it slid to 0.405% at the close to lose 0.001 percentage point compared to July 28th, while marking a fourth straight day of decline.

The yield on UK 10-year government bonds soared as high as 1.985% on July 29th, after which it slid to 1.980% at the close to gain 3.7 basis points (0.037 percentage point) compared to July 28th, while marking a second straight day of gains.

The spread between 10-year UK and 10-year Japanese bond yields widened to 1.575% on July 29th from 1.533% during the prior day. The July 29th yield difference has been the largest one since July 23rd, when the spread was 1.579%.

Daily and Weekly Pivot Levels

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

R1 – 193.50
R2 – 193.64
R3 (range resistance – green on the 30-minute chart) – 193.79
R4 (range breakout – red on the 30-minute chart) – 194.22

S1 – 193.20
S2 – 193.06
S3 (range support – green on the 30-minute chart) – 192.91
S4 (range breakout – red on the 30-minute chart) – 192.48

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

Central Pivot Point – 192.58
R1 – 193.55
R2 – 195.02
R3 – 195.99

S1 – 191.11
S2 – 190.14
S3 – 188.67