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GBP/JPY at key resistance and losing momentum

FXStreet (Barcelona) - GBP/JPY is trading at 173.75, down -0.16% on the day, having posted a daily high at 174.31 and low at 173.71.

GBP/JPY has been building bids on the base of 173.80 support in the opening trade of this week's business after falling from above the 174 handle when supply reversed the opening bullish gap. The head and shoulders remains bullish on the daily chart with the pair changing hands above the neckline and the greenback is still holding the Yen off with a bias to the upside in USD/JPY. However, the cross is losing momentum and the market is more US dollar friendly than it is to sterling. This week comes with the FOMC and that may be another catalyst for some movement in the dollar which probably has room to manoeuvre against the pound than it does in the Yen. Anything pro greenback could weigh on the cross.

Sterling may be facing headwinds without a convincing grip within the 1.60’s. There is only moderate wage growth in UK labour market and there are disinflationary pressures that would usually mean that a period of lose monetary policy is required. The BoE has now been speculated therefor to hold off from an interest rate hike until the second half of 2015 and that is starting to dampen the current outlook for the pound.

GBP/JPY noteworthy levels

Current price is 173.76, with resistance ahead at 174.03, 174.26, 174.31 and 174.41 (Daily Classic R1). Next support to the downside can be found at 173.69 (Daily Classic PP), 173.67 (Hourly 20 EMA), 173.42 (Daily 100 SMA) and 173.32 (Daily 20 SMA).

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