The Pound dropped more than 1% against the Japanese yen, dropping to the 165 level as traders sold Sterling following some miserable economic data.
Earlier today, UK retail sales disappointed notably, printing 0.9% year-on-year for March, down from 7.2% in February and below the 2.8% projected. The monthly gauge fell further from -0.5% to -1.4%.
Retail sales ex-fuel also came out below forecast, hitting -0.6% yearly and -1.1% monthly. Both numbers fell sharply from February’s levels. The GBPJPY cross dropped circa 200 pips following the data.
Meanwhile, the outlook for the British economy dropped to its lowest level since the Great Financial Crisis, the results of a closely-followed survey revealed. Consultancy GfK's consumer confidence index for Britain declined to -38.0 in April from -31.0 in March. Analysts had expected a smaller drop to -33.0.
From the technical perspective, the next support seems to be at March highs near 164.50/60. As long as the cross trades above that level, the medium-term outlook appears bullish, and the current dip might be bought.
However, larger stop-losses of long positions could be hit in case of a bearish breakdown, likely dragging the GBPJPY cross further lower toward 162.70.
On the other hand, the resistance is expected near the cycle highs in the 168 area. If the cross jumps above that zone, the long-term uptrend should continue toward the psychological 170 threshold.