GBP/JPY Could Break 160 on Fixing Flows

**Update on 6/30/09 at 1:30pm – GBP/JPY hit an intraday high of 160.27, hopefully you were able to bank some pips on this trade. The reversal candle that we have right now suggests that we could see a deeper pullback to 156.

We have a nice upside breakout in GBP/JPY this morning that has been driven by the strong rally in equities.

Tomorrow is also the end of the month, quarter and half year which means that fixing flows could lead erratic intraday activity over the next 24 hours. Typically fixing flows are partially based upon relative performance of stock markets over the past month, but because tomorrow is the month and quarter end, we could see divergent buying patterns by fund managers. This is because on a monthly basis, the S&P 500 outperformed the German DAX and U.K. FTSE but underperformed the Nikkei. On a quarterly basis however it underperformed the DAX and Nikkei but outperformed the FTSE. If the month and quarter to date performance were in line directionally, the fixing flows would be easier to predict.

However U.K. stock markets have dramatically underperformed Japanese equities which should pave for GBP/JPY buying over the next 24 hours. First quarter GDP revisions and the current account balance are also due for release tomorrow. The trade deficit narrowed in the first 3 months of the year, which means that the current account deficit should have narrowed.

Technicals, fundamentals and flow point to the strong potential for further gains in GBP/JPY



  1. Yesterday’s GBP fake move signals traders are looking impatiently for any sign of breakout on FX charts. It’s been pretty frustrating few weeks for trend seekers. The longer the consolidation, the stronger the move that follows.

  2. A fixing basically occurs either once or twice a day at defined times. It is used by different counterparties to set rates. Since FX is an OTC market, we never know what type of contract is being fixed but we do know that there could be alot of volatility around the fix as some counterparties try to keep the rate above or below certain levels


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