Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

British Pound Continues To Rally Against The Yen

GBPJPY not only broke over 144.81 but also the strong resistance of 145.98. The pair went as high as 146.48 before closing for the last week at 145.67.

Recent economic releases from UK and Japan

The latest economic releases from the U.K. and Japan clearly indicate an edge for the British pound.

GBP/JPY economic strength meter from ForexAbode.com

Recent economic releases from U.K.:

  1. Mortgage Approvals: 55.785K, positive as compared to the forecasts (54.500K) as well as the previous 54.036K.
  2. Consumer Credit: GBP 0.649 billion, positive as compared to the forecasts (GBP 0.200 billion) as well as the previous GBP 0.0818 billion.
  3. Net Lending to Individuals: GBP 1.7 billion, positive as compared to the forecasts (GBP 0.9 billion) as well as the previous GBP -0.1 billion.
  4. Gfk Consumer Confidence: -26, positive as compared to the forecasts as well as the previous -29.
  5. Nationwide Housing Prices - Not seasonally adjusted (YoY): 0.0%, positive as compared to the forecasts (-0.3%) as well as the previous -1.0%.

Latest economic data from Japan:

  1. Retail Trade: Year on year retail trade was 0.4% and though slightly better than the consensus of 0.3% but was quite less than the previous 1.2%. The change in larger retailers' sales in December was 0.0% against the previous 0.9%.
  2. Nomura/JMMA Manufacturing PMI: 47.7 against the previous 45.0.
  3. Industrial Production (YoY) - prelim for December: -7.8% against the previous -5.5%. The month on month change was 2.5% against the consensus of 4.5% and previous -1.4%.
  4. Labor Cash Earning (YoY): -1.4% against the previous -0.8%.
  5. Vehicle Production (YoY): -17.2% against the previous -8.4%.
  6. Housing Starts (YoY): 10.0%, as compared to the forecasts (13.5%) as well as the previous 10.3%.
  7. Overall Household Spending: -0.7%, negative as compared to the forecasts (-0.3%) as well as the previous 4.1%.
  8. Unemployment Rate: 4.2%, negative as compared to the forecasts as well as the previous 4.1%.

GBP/JPY Outlook:

The strong upward jump which first broke over 145.39 i.e. 61.8% retracement of the downward move during the beginning of August 2009 (163.08) to the low of 116.84 on September 22nd, 2011 and then also 145.98 keep the bullish outlook intact.

On the upside a decisive break over 146.98 should target the psychological level of 150.00. In case GBPJPY manages a break over 150.00 then the next target should be 150.72 resistance before any attempt is made toward the next retracement level at 152.16.

However on the downside any decisive break below 144.20 will represent a break below the Tenkan line support of daily Ichimoku cloud and will also indicate that the recent resistance which should act as support now is not holding. Such a move will start neutralizing the above mentioned outlook for the short-term and should bring further downward consolidation towards the support zone of 141.60 to 141.90. The support of the upper edge of daily Ichimoku cloud should come into picture here. Please note that this support has not been broken since mid-November 2012. Any break below this neutralize the outlook for immediate gains and such a move should bring deeper consolidations towards 139.55.

Please note that the above GBP/JPY weekly forecast is the view of the author and is not presented as an investment advice.

Contact the author at Google +Himanshu Jain.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.