Forex Trading: GBP/JPY Reaches New Lows Today
By Greg Michalowski on December 29, 2008 | More Posts By Greg Michalowski | Forex News By FXDD

The GBP/JPY reached a new mult year low today at the 131.66 level. This is the lowest level since May 1995 when the pair hit a low of 131.58. The low going back to 1978 has been 129.32 which was hit in April 1995. Another key level to watch on the downside is 130.87. This is the low close for the pair also reached in April 1995.
The decline from the high set in July 2007 at 251.09 has been dramatic and historic in terms of the speed of the decline. The decline was helped by the liquidation of the carry trade that dominated the pair when UK rates rose and Japan rates remained near zero well into the 2007 year. Since December 2007, when the UK first cut rates from 5.75% to 5.5%, the trend in the GBP/JPY has accelerated to the downside. Currently, the UK base rate is at 2.0% with expectations for another 50 basis point cut to 1.5% in January.
Looking at the shorter term chart, the pair has been using the 100 hour moving average as resistance. On 5 separate occassions the key moving average has been tested. Currently, the average is at 133.36 and the pair would have to trade above this level to turn the bias to the upside for the pair. Another resistance level to watch would be the 132.04 level. This is the low from December 22nd. A strong move above this level may solicity some short covering in the pair.
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Thanks for the info Greg.