Should investors be wary of the direction of the GBP/JPY pair, which has been weakening after hitting a new high this month?

Should investors be wary of the direction of the GBP/JPY pair, which has been weakening after hitting a new high this month?

12.01.2024

In the U.S. currency market yesterday, the dollar traded in a narrow range against the euro after the U.S. December CPI, released yesterday, showed that the year-over-year core rate fell by 0.1 percentage points from the previous month’s 4.0% to 3.9%.The EUR/USD pair traded between 1.0930 and 1.0998, with price action remaining centered around the 20-period moving average on the hourly chart. During today’s Asian session, the EUR/USD pair has shown a slight upward trend. We will need to assess carefully whether the euro will continue to strengthen against the U.S. dollar.

In European trading, the pound rose slightly against the yen ahead of next week’s UK CPI release. GBP/JPY climbed from 185.069 to 186.162, hitting a new high for the month. However, during today’s Asian session, GBP/JPY faced resistance at the 20-period moving average on the hourly chart and is now heading lower. We will be closely monitoring whether the pound weakens as we head into European trading hours.

Today's economic indicators include the Japan Economic Watchers Survey at 2:00 PM, Turkey's current account balance at 4:00 PM,UK Monthly GDP, UK Industrial Production, UK Manufacturing Output, UK Trade Balance, at 16:45: France Consumer Spending, France Consumer Price Index, at 21:00: India Industrial Production, India Consumer Price Index, at 22:30: US Producer Price Index, and at 24:00: remarks by Kashkari, President of the Minneapolis Federal Reserve Bank.We should remain cautious regarding the direction of GBP/JPY, which has been weakening after hitting a new high this month.