Spotted on the daily chart of the pound yen (GBPJPY) is an ascending triangle chart pattern which is interpreted as a bullish continuation pattern by technical analyst. At the current price level we can expect either a breakout or a bearish retracement to the lower trendline.
My analysis on the pound however favours a bearish retracement as the pound came under a sell pressure on Friday after data from the manufacturing sector which makes up around 80% of total Industrial Production and tends to dominate the market impact came out way worse than expected causing the pound to slide against a basket of major currencies.
On the technical side, the stochastic is currently overbought and Friday’s daily candle closed a doji cross. Given the odds of the current state of the U.K. economy, poor manufacturing data, hard-brexit pandemonium, we should look out for a bearish retracement to the lower trendline.