GBP/JPY: Sterling Rebounds Amidst Yen Weakness and Tariff Fears

The GBP/JPY  recovered more than 100 pips as the Pound sterling recovers ahead of US NFP data.It hit a low of  195.28 and is currently trading around 196.62.  Intraday trend is bullish as long as support 195.25 holds.

Increased risk of much higher US tariffs on Japanese exports is presently driving pressure on the Japanese yen, possibly reaching 30% or 35% if a trade agreement is not reached. This uncertainty results from failed negotiations, especially about US calls for more Japanese imports of American rice and automobiles, and Japan's attempts to lower tariffs on auto exports. The approaching deadline and risk of retaliatory tariffs have caused investors to become more wary, so resulting in capital outflows from the yen as Japan's export-driven economy, notably its weak automobile sector, now has the prospect of decreased exports, a worsened trade balance, and stifled economic growth.

The GBP/JPY pair is trading above 55 and 200 EMA (Short-term) and below 365 EMA (long-term) on the 15-min chart, confirming a mixed trend.  Any violation below 195.70 indicates the intraday trend is weak. A dip to 195.25/194/193.70 is possible.  Immediate resistance is at 197 a breach above this level targets of 197.53/197.75/198.35/198.80/200/202.

Market Indicators (15 min chart)

CCI (50)- Bullish

Directional movement index - Bullish

Trading Strategy:  Buy  on dips

 
 It is good to buy on dips around 196 with SL around 195  for a TP of 197.70/198.