GBPJPY has been trending lower across multiple time frames, moving below a descending trend line on its 4-hour forex chart.

Price is currently pulling up to the resistance area and might be ready to resume its drop to the previous lows at 154.75.

Using the Fib tool on the latest swing low and high shows that the 38.2% level lines up with the 158.25 area and the falling trend line. A larger retracement could last until the area of interest around 160.50, which might be the line in the sand for any short-term retracement. RSI is still on middle ground on its way up, which suggests that there may be some buying pressure left.

The 100 SMA is below the 200 SMA, confirming that the path of least resistance is to the downside. Stochastic is still on the move up but is almost in the overbought region already, suggesting that buying pressure could weaken soon. 

Earlier today, CPI readings from Japan came in mixed, with the Tokyo core CPI showing a 0.1% drop instead of staying flat and the national core CPI staying flat instead of posting the projected 0.2% drop. 

Data from the UK came in weaker than expected yesterday, although the preliminary GDP reading showed no change from the previous 0.5% estimate. Preliminary business investment showed a sharp 2.1% drop instead of the estimated 0.6% gain.

Brexit fears are also weighing heavily on the pound, as leaving the EU could mean more financial and economic uncertainty. The referendum is scheduled for June, which suggests that traders have enough time to price in this possibility.

By Kate Curtis from Trader’s Way