The Geppy is enjoying risk appetite and other elements to make another attempt to break higher. Will it make it? Update on the forces moving this cross.
GBP/USD enjoyed the weekend gaps to jump over the strong resistance line against the dollar. After slipping back down to the critical level, it got a boost:
British trade balance was much better than expected – 6.2 billion, the best in 6 months and far better than the previous month’s deficit. This helped the Pound settle safely above 1.5350, and begin climbing.
GBP/USD is now struggling with 1.5440, in a second attempt to break this minor resistance line. A break of this barrier will also move GBP/JPY.
On the other side of the cross, the Japanese Yen is retreating. It enjoyed hopes of a devaluation of the Chinese yuan, but that isn’t happening yet. What is happening in the markets is more optimism about global recovery, triggering the selling of “safe haven” currencies such as the yen.
This risk appetite behavior is fueled not only by the optimism about the Greek crisis. The great report from Intel shows that the economic situation is improving. The move by the Singapore’s central bank, which strengthened its currency (USD/SGD) on economic recovery, also raised the optimism, and weakened the yen.
Both moves sent GBP/JPY almost 100 pips higher to 144.40. It’s now making another attempt to break 145. The peak of 144.72 reached last week was the highest in two months, but the Geppy failed to move above 145.
Another failure to break above 145 could lead the pair back down towards 140, and then towards 138, which was also a line of resistance – a crossroad for GBP/JPY.
This line, 145, is exactly half way between the previous resistance line of 143 that held the pair lower, and 147, which is the next resistance line. Beyond 147, the cross will approach the round number of 150, which is a tough spot.
This cross continues to be quite volatile.
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