GBPJPY Defends 6-year Highs

GBPJPY Defends 6-year Highs
Despite the sharp rally off its March lows, the GBPJPY cross remained bid and traded half a percent higher today, rising to 160.50.
The whole rally has been fueled by the strength in the USDJPY pair, which surged amid rising yields. However, although the GBPUSD pair has managed to defend the 1.30 support, its share on the GBPJPY vertical movement has been minimal so far. 

Yesterday's inflation numbers for February brought another upside surprise as the headline CPI number rose more than expected, printing 6.2% yearly, up from 5.5% previously (and 5.9% forecast), marking the highest inflation reading since March 1992, when inflation was 7.1%. In addition, the core CPI also accelerated faster than thought, rising to 5.2% from 4.4% in January.

Today's data showed that the UK manufacturing PMI declined more than expected in March, dropping to 55.5 from 58 in February. On the other hand, the services sector improved slightly to 61 from 60.5 previously.

Technically speaking, as long as the GBPJPY cross trades above previous highs of 158, the medium and long-term outlooks seem bullish. However, the short-term time frame seems heavily overbought, likely leading to a correction in the following days.

The next resistance will be at yesterday's highs of 161.10; when cleared, we might see another leg higher toward 162.
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