Last week, we saw GBP/JPY following the same bearish direction as the previous three weeks, with its strongest impulse happening during Wednesday's New York session.
When looking at the weekly time frame, this pair has been in an uptrend. However, it is fast approaching a breakout of this upwards trendline, which has held prices up for the past couple of years.
Technically, we can look at the hourly chart and see the adherence the price showed to the Fibonacci and Exponential Moving Average.
Looking at the most recent hourly range, we see GBP/JPY retrace above the week's opening price during Monday's New York session to the 61.8 level.
That's the area in which the EMA is located, indicating another confluence for a move down. Price didn’t return to that area, with only two other weak retracements shown before the sell-off.
Fundamentally speaking, there were no high impact news events for either currency last week. However, the UK has had its hands full with several factors.
Brexit issues with Ireland continue, and numbers show the economy shrank at the end of March. Factor in that the Japanese yen is typically seen as a safe haven, and the bearishness in this pair isn't too surprising.
The coming week for GBPJPY
Looking ahead at this upcoming week, it is full of news events for the GBP, with monetary policy report hearings happening Monday. This is followed by unemployment, CPI numbers, and retail sales later in the week.
Of course, the most critical report is CPI, which is to be released on Wednesday. UK's CPI for April is expected to rise two percentage points to 9%, from 7% in March.
The significant economic report from Japan is released at the end of the week. Japan's April CPI is released on Friday, and the market consensus is that it will rise to 1.5% from 1.2% in the previous reading.