GBP/JPY digests UK's 'O.K.' GDP around 143.70 handle, risk-on targets 148.00

Currently, GBP/JPY is trading at 143.69, up +0.45% or 65-pips on the day, having posted a daily high at 144.35 and low at 142.88.

The British pound vs. Japanese yen enjoyed two-weeks in the green yard, and it seems the uptrend is likely to continue due to a positive GDP reading in the UK. However, how far can any economy run if growth is supported only by the Service Sector? Then, 'hard' Brexit becomes a challenging scenario knowing how vulnerable is the GDP figure in 2017. 

Historical data available for traders and investors, during January, indicates that GBP/JPY cross had the best trading day at +1.64% (Jan.17) or 229-pips, and the worst at -1.58% (Jan.9) or 223-pips.

0.6% 'a better than expected result'; not enough 

Bloomberg reports, "While the support is welcome, it may prove unsustainable. Households are borrowing with abandon and saving less, and an expected pickup in inflation through this year raises the risk of a squeeze on incomes. Economists forecast a sharp slowdown this year, and Bank of England of England Governor Mark Carney has warned of pressure from inflation and weaker business spending."

The report continues, “Today’s data was good, but there are pockets of potential unsustainability in household spending that could drive a slowdown,” said Chris Hare, an economist at Investec Securities in London and a former Bank of England official. The economy’s “rebalancing” toward exports has so far failed to materialize, he said."

Technical levels to watch
In terms of technical levels, upside barriers are aligned at 145.39 (high Jan.3) and above that at 148.45 (high Dec.15). While supports are aligned at 142.33 (50-DMA, blue color) and below that at 140.87 (200-DMA, green color). On the other hand, Stochastic Oscillator (5,3,3) seems spinning inside the overbought territory, therefore, there is evidence to expect further sterling gains in the near term.  

On the long term view, if 136.44 last's week pin bar (low Jan.15) is in fact, a short-term bottom, the upside runs all the way towards 146.95 ( reverse long-term 61.8% Fib) and 148.96 (short-term 61.8% Fib). However, without removing the 'hard' dark cloud from all Brexit negotiations, the sterling faces a gargantuan resistance level as the cross gets closer to 148.00 round figure. To the downside, there is somehow this 'M' pattern 'in the making' that trades have been following, therefore, two logical targets are aligned at 139.74 (short-term 38.2% Fib) and below that at 134.04 (short-term 23.6% Fib). 

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