GBP/JPY – sits above 23.6% Fibo, ignores data ahead of BOJ

GBP/JPY cross backed off from session lows to trade above 136.93 (23.6% of May 31 high – June 24 low) and ignored Japanese data releases ahead of Bank of Japan (BOJ) rate decision.

Japan deflationary spiral enters fourth month

Data released ahead of BOJ rate decision showed Japan’s struggle with deflation intensified in June, as consumer prices declined for a fourth consecutive month. The core figure dropped as well for the fourth month. The weak data only adds to the speculation the BOJ and Japanese government would have to go to extremes to defeat deflation.

However, the data has not had any impact on the Yen pairs as the focus remains on BOJ. Volumes are thin and thus there is risk of erratic moves heading into the BOJ event. The pair was last seen trading around 137.35 levels.

GBP/JPY Technical Levels

A breakdown of immediate support at 136.93 (23.6% of May 31 high – June 24 low) could yield a move lower to 133.21 (June 24 low), under which the cross could target 128.60 (July 6 low). On the other hand, a break above 138.62 (session high) could see prices target 140.00 levels. A violation there would expose 142.08 (38.2% of May 31 high – June 24 low).