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GBP/JPY eyes september lows

FXStreet (Córdoba) - GBP/JPY is falling for the fourth day in a row and recently bottomed at 169.90, the lowest price since September 8. The pair rebounded sharply from levels under 170.00 and bounced toward 170.50, where currently trades, still more than a hundred pips below yesterday’s closing price.

GBP hit by rate expectation

Economic data from the United Kingdom weakened the pound in the currency market, particularly the inflation report. The CPI remained flat in September, analysts were expecting a 0.2% increase; the annual rate fell from 1.2% to 1.4%, the lowest level since 2009. Variations in the PPI index also were lower than expected.

“With today's report, the pendulum of expectations is swinging further out into H2 2015. The market is now discounting a dovish Quarterly Inflation Report (out next month), and forcing the hawks (Weale and McCafferty) to retreat”, said Marc Chandler, Global Head of Currency Strategy at Brown Brothers Harriman, that identified the shift in rate hike expectations as a major weight on the pound.

GBP/JPY approaching 169.20/40

The sharp decline pushed the pair toward september lows that lie at 169.32; if the price breaks lower it would be trading at the weakest since March. The area around 169.20 and 169.45 is a key support (April, May and Sep lows).

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