The British Pound got some great news, managed to climb. While GBP/USD stopped at a resistance line, GBP/JPY managed to break higher. Update on both pairs.
British Nationwide HPI rose by 0.7%, significantly higher than the early expectations for a 0.2%. This important house prices index showed that the dip in house prices last month was only temporary. A rise in house prices means that the economy is doing well, and prices continue to rise – this is necessary for a future rate hike. Three additional factors pushed the Pound higher:
The final GDP for Q4 was revised to the upside – a growth rate of 0.4%. GDP was better than earlier reported – 0.3%. Although the growth rate leans heavily on a downwards revision of the figure for Q3, this revision was also positive for the Pound.
The third positive indicator was the Current Account – Britain’s deficit was lower than expected – 1.7 billion. Expectations stood on a deficit of 4.6 billion. Alistair Darling hurt the Pound last week, but in his appearance today he made no damage. That’s another factor that allowed the Pound to rise.
All these good news, together with the dollar’s weakness that continued from yesterday, sent the Pound higher. GBP/USD pushed above the round number of 1.50 and climbed steadily to 1.5110 -this was last week’s high. At this point, the Pound stopped. It doesn’t have the energy to continue higher.
If GBP/USD crosses the 1.5110 line, the next line of resistance is already a very strong one -1.5350. The Pound was supported at this line before the big collapse, and afterwards this line served as a strong resistance line.
Below, 1.50 is a very minor support line that can temporarily hold the pair if it drop from the area of 1.5100. Below, the 1.4780 line is the 2010 low and provides very strong support for the pair.
GBP/JPY on the rise
The Geppy was at crossroads last week – crossroads between a downtrend and an uptrend channel. It seems that the pair picked a direction – up. GBP/JPY enjoys the Japanese Yen’s weakness to march above 140. This is the highest level in 5 weeks and a return to the prices before the collapse.
GBP/JPY will meet significant resistance at 143.70, a peak before the fall, and also a support line in December. Further above, 150 is a strong line of resistance – a round number and also a resistance line in January.
Looking down, GBP/JPY can expect support at the area of 138, followed by a stronger line of support at 134.
A break in this cross, also known as “The Dragon” can happen if USD/JPY breaks above the might line of 93.80. Japan’s Tankan Manufacturing Index, due tomorrow, will probably set the tone.
All in all, the Pound is recovering, and this is strongly felt against the Yen.
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