The GBP/JPY pair attracted buyers near 189.20 during early European trading on Tuesday, buoyed by recent positive labor market data from the UK. The Pound Sterling (GBP) gained momentum following an unexpected decline in UK unemployment rates for the three months ending in June.
According to data released by the Office for National Statistics (ONS) on Tuesday, the UK unemployment rate fell to 4.2% from 4.4% in the previous period. This figure surpassed economists’ expectations, which had projected an increase to 4.5%. Additionally, the Claimant Count Change for July showed a rise of 135,000, compared to a revised gain of 32,300 in June, and significantly above the anticipated 14,500 increase.
Despite these gains, the GBP/JPY pair remains under a bearish trend on the 4-hour chart, trading below the crucial 100-period Exponential Moving Average (EMA). However, further upward movement cannot be ruled out, as the Relative Strength Index (RSI) is edging higher, currently positioned around 61.85.
A decisive move above the upper boundary of the Bollinger Band at approximately 189.50 could propel the pair towards the psychological level of 192.00. Continued buying pressure beyond this point might drive the GBP/JPY to 193.26, the high reached on August 1.
Conversely, initial support is identified at the low of August 9, around 186.48. The critical support zone lies between 185.55 and 185.60, marking the low of August 8 and the lower limit of the Bollinger Band. Additional downside support is observed at 182.81, the low recorded on August 6.
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