Key Points
- The British Pound is forming a constructive pattern against the Japanese yen and looks set for more gains.
- There is a major contracting triangle pattern formed on the hourly chart of the GBPJPY pair, which acting as a consolidating pattern currently.
- The UK PMI service was released by both the Chartered Institute of Purchasing & Supply and the Markit Economics today.
- The result was disappointing, as the UK PMI service registered a contraction reading of 47.4 in July 2016.
Technical Analysis
The British Pound after trading as high as 143.23 against the Japanese yen found sellers and moved down. Later, it started recovering, and currently forming a major contracting triangle pattern formed on the hourly chart of the GBPJPY pair.
The pair is currently trading near the 21 hourly simple moving average, which may act as a resistance and push the pair down.
On the downside, the triangle support trend line holds a key. As long as it is intact there is a chance of more gains.
UK Services PMI
Today in the UK, the Services PMI, which interviews German executives on the status of sales, employment, and their outlook was released by both the Chartered Institute of Purchasing & Supply and the Markit Economics.
The market was expecting a decline from 52.3 to 49.2 in July 2016. However, the result was very negative, as the UK PMI service registered a contraction reading of 47.4. Moreover, the Markit Economics stated that the “UK economy opened the third quarter on a weak footing. Output and new orders both fell for the first time since the end of 2012, while service providers’ optimism about the coming 12 months slumped to a seven-and-a-half year low”.
Overall, there may be an increase in selling pressure GBPJPY, but the triangle support may act as a barrier.
