The GBP to JPY (GBPJPY) pair rose by almost 20 basis points today as traders reacted to the divergent PMI data from Japan and the UK. The pair is trading at 133.40, which is higher than yesterday’s low of 131.81.
UK business activity bounce back
The GBP to JPY pair rose after Markit released upbeat manufacturing and services PMI data. According to the research company, the manufacturing PMI in the UK jumped to 50.1 in June as more companies reopened their businesses. In May, the PMI was at 40.7. The critical services PMI rose to 47.0 from the previous 29.0.
This number is important because of the important role the services sector plays in the economy. For one, it is responsible for more than 80% of the total GDP and employs millions of people. According to Markit, the best performing services sector companies are in finance and transport.
The data came on the same day that Boris Johnson unveiled more measures to reopen the economy. The new measures will have a one-metre rule and allow more companies in the service sector to reopen.
Japan economy in contraction
The GBPJPY pair also reacted to weak PMI data from Japan. According to Markit, the important manufacturing sector in Japan continued to contract this month. The manufacturing PMI declined from the previous 38.4 to 37.8. In the same month, the services PMI number improved from the previous 26.5 to 42.3. The manufacturing sector is more important in Japan, a country well-known for its manufacturing giants like Toyota and Mitsubishi.
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GBP to JPY technical analysis
The GBPJPY pair rose to an intraday high of 133.95, which is higher than today’s low of 131.81. On the daily chart, the price is along the 38.2% Fibonacci retracement level. It is also slightly below the 50-day and 100-day exponential moving averages.
Also, the pair has formed a bullish engulfing pattern, which means that it could continue to rise especially if it moves above the 50-day EMA at 134.00. On the other hand, a move below the day’s low will see the GBP to JPY pair accelerate its downward trend.
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