GBPJPY Technical Analysis | Forexlive

GBP

• The BoE left interest rates unchanged as expected, but Haskel and Mann this time voted for a hold rather than an increase.
• The jobs report fell short of expectations with the unemployment rate rising sharply although wage growth increased.
• UK CPI beat expectations with services inflation remaining stable, continuing to support the BoE’s patient stance.
• The latest UK PMIs showed that the Services PMI was slightly below expectations and the Manufacturing PMI was above expectations.
• The market expects a first rate cut in August.

JPY

• The BoJ finally ended the negative interest rate policy as planned at the last meeting by raising interest rates by 10 basis points, bringing the rate back to a target of between 0.00 and 0.10 %. Additionally, the central bank abandoned yield curve control and ETF purchases, while maintaining QE.
• The latest unemployment rate fell short of expectations, although it continues to hover around cycle lows.
• Japanese PMIs have further improved for both manufacturing and services measures, although the former remain in contraction territory.
• The latest Japanese salary data is in line with expectations.
• Tokyo’s CPI, considered a leading indicator of the national CPI, came in line with expectations.
• The market expects another rate hike from the BoJ this year, although the timing remains uncertain.

GBPJPY Technical Analysis – Daily Time Frame

On the daily chart, we can see that GBPJPY bounced off the 61.8% Fibonacci retracement level around the lower boundary of the ascending channel and extended the rally to the 193.00 handle. Buyers are targeting the upper boundary of the channel around the 195.00 handle, but they will first need to break the cycle high to further extend the rally. Sellers, on the other hand, might want to intervene around the cycle high with defined risk above to position themselves for a fall to the channel’s lower boundary while aiming for a break below.

GBPJPY Technical Analysis – 4 hour time frame

On the 4-hour chart, we can see that the price is now in a key resistance zone around the 192.85 level, where the pair has been rejected several times. UK data has been quite strong and continues to point to higher rates for longer for the BoE, so buyers have the fundamentals on their side to attempt a breakout. Sellers, on the other hand, will likely intervene again in the face of this resistance to position themselves in favor of a return to the lower boundary of the channel.

GBPJPY Technical Analysis – 1 Hour Timeframe

On the hourly chart, we can take a closer look at recent price action, with the pair recently printing higher lows, indicating bullish momentum. If the breakout fails and the price falls below the black trendline, sellers will regain control and push the price back into the lower boundary of the channel, as buyers will likely pull back at this point.

Events to come

Tomorrow we get the latest US jobless claims figures, while on Friday we wrap up the week with Japanese CPI and UK retail sales.