Short-Term Forex Technical Outlook: GBP/JPY

Currency Pair: GBP/JPY
Chart: 60 Min Charts
Short-Term Bias: Bearish

The British pound weakened against its currency counterparts this week as the Bank of England forecasts the economy to contract 4.0% in the first quarter, and the GBPJPY should continue to hold its bearish trend going forward as BoE Governor Mervyn King and Co. are expected to ease policy further. After reaching a high of 141.55 last month, we saw the pair slip to a low of 118.83 towards the end of the month, and as investors remain risk adverse, I expect the pair to retest the 1/23 low over the near-term. Earlier this week, the pound-yen finally filled in the gap from 1/12, but looks to be finding short-term resistance near 136.60-70 (78.6% Fib), which favors a bearish forecast for the pair. Over the remainder of the week, we may see the pair work its way towards 127.40-50, but the bullish divergence in the RSI suggests that short-term retracement could be underway.

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