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GBP/JPY and GBP/USD Daily outlook


GBP/JPY weakens mildly today but after all it's still staying in established tight range above 202.50. Further sideway trading could still be seen. But consolidation from 202.50 should be relatively brief as long as 207.27 minor resistance holds. Below 202.50 will indicate recent decline has resumed for mentioned 119.78 target. Above 207.27 will indicate that a short top bottom is formed and bring stronger rebound to 4 hours 55 EMA (bow at 208.24) and above. But upside should be limited well below 211.58 resistance and bring fall resumption.

GBP/JPY august 20 2008
BoE Voted 7-1-1 to Leave Rates Unchanged, Besley Votes For Hike.
The BoE voted 7-1-1 to keep rates unchanged for a second meeting in a row. Tim Besley continues to push for a rate hike, while perennial dove David Blanchflower called for easing. The majority chose to stand pat as a rate hike would have risked hurting confidence and a rate cut would increase the risk of keeping inflation elevated. Although the central bank continues to maintain that a rate increase would “material undershoot” CPI, and that wage growth has remained subdued. Tim Besley argued that a rate hike would be a prudent pre-emptive move which would anchor inflation for the long-term. Yet, the MPC recognized that the growth outlook has worsened in the past month. The pound remained unchanged after initial volatility as the balanced statement didn’t point to a clear direction.

Cable continues to be bounded in choppy sideway trading above 1.8515 today and outlook remains unchanged. Consolidation should still be relatively brief as long as 1.0878 minor resistance holds and below 1.8515 will indicate that recent decline has resumed for next target of 100% projection of 2.1161 to 1.9337 from 2.0158 at 1.8360. However, above 1.8787 will indicate that a short term bottom is in place with bullish divergence condition in 4 hours MACD and RSI. Stronger rebound should then be seen to 38.2% retracement of 2.0158 to 1.8515 at 1.9413. Though, upside should be limited below 1.9541 resistance and bring fall resumption.

GBP/USD august 20 2008 daily outlook
Focus is now on cluster support at 1.8303/60 (100% projection of 2.1161 to 1.9337 from 2.0158 at 1.8360 and 38.2% retracement of 1.3680 to 2.1161 at 1.8303). Sustained break of which will indicate that whole decline from 2.1161 is probably impulsive in nature and add more credence to the case of long term reversal. This will pave the way to next key support at 1.7047 first. On the upside, while strong rebound might be seen, a break of 2.0158 resistance is still needed to indicate fall from 2.1161 has completed. Otherwise, another fall should still be seen after correction.


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