Key Points
- The British Pound dived and even traded below the 129.00 level against the Japanese yen.
- The GBPJPY pair is currently recovering, but it is forming a breakout pattern, which is a likely a bearish triangle.
- The UK Industrial Production released by the National Statistics posted a decline of 0.5% in May 2016.
- The UK Manufacturing Production also posted a decline of 0.5% in May 2016, less than the forecast.
Technical Analysis
The British Pound recently moved down towards the 128.80 level against the Japanese yen before finding bids. The GBPJPY pair is currently recovering, but likely forming a bearish triangle pattern on the hourly chart, which can ignite the next move in the near term.
The 38.2% Fib retracement level of the last drop from the 136.80 high to 128.74 low is also acting as a resistance area currently.
On the downside, a close below the triangle support trend line may call for a move towards the last low of 128.74.
UK Industrial & Manufacturing Production
Earlier today, the UK Manufacturing Production, which measures the manufacturing output was released by the National Statistics. The market was not expecting a decline of 1% in May 2016, compared with the previous month. However, the outcome was better, as there was a decrease of 0.5%.
Moreover, the report added that “Total production output is estimated to have increased by 1.4% in May 2016 compared with May 2015. There were increases in 3 of the 4 main sectors, with the largest contribution coming from manufacturing (the largest component of production), which increased by 1.7%.”
Overall, the GBPJPY pair may recover a few pips in the near term, but it overall remains in a downtrend.
