GBP
- The BoE left interest rates unchanged as expected at the last meeting removing the tightening bias but reaffirming that they will keep rates high for sufficiently long to return to the 2% target.
- The latest employment report showed job losses in December and lower than expected wage growth.
- The UK CPI beat expectations across the board, which gives the BoE a reason to remain patient.
- The latest UK PMIs showed the Manufacturing sector improving but remaining in contraction while the Services sector continues to expand.
- The latest UK Retail Sales missed expectations across the board by a big margin as consumer spending remains weak.
- The market expects the BoE to start cutting rates in May.
JPY
- The BoJ kept its monetary policy unchanged as expected with interest rates at -0.10% and the 10 year JGB yield target at 0% with 1% as a reference cap.
- Governor Ueda repeated once again that they won’t hesitate to take easing measures if needed but he’s becoming more optimistic on achieving their 2% target.
- The Japanese CPI eased further across all measures which makes it even harder to expect a rate hike from the BoJ anytime soon.
- The latest Unemployment Rate ticked lower hovering around cycle lows.
- The Japanese PMIs improved for both the Manufacturing and Services measures although the former remains in contractionary territory.
- The Japanese wage data missed expectations again today although there was a pick up from the prior reading.
- The Tokyo CPI, which is seen as a leading indicator for National CPI, fell much more than expected recently.
- The market expects the BoJ to hike rates in Q2.
GBPJPY Technical Analysis – Daily Timeframe
On the daily chart, we can see that GBPJPY rejected the cycle high at 188.67 as the sellers stepped in with a defined risk above the level to position for a drop into the 184.28 support. The pair failed to reach the support and bounced around the 185.20 as the BoE maintained its hawkish stance. The price action has been choppy ever since and we need to zoom in to get some more clarity.
GBPJPY Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have now an important zone around the 186.65 level where the pair continues to chop around. It looks like this zone will act as kind of a barometer with the price above the level being more bullish and below it being more bearish. We can expect the buyers to pile in now to target the cycle high again, while the sellers will want to see the pair reversing and breaking back below the level to target the 184.28 support.
GBPJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the recent price action with the pair bouncing around the 186.65 level. Right now, the price is breaking the 186.65 resistance, so we can expect the buyers to pile in to target the 187.65 level. If the price were to fall from here and break back below the 186.65 level, then the sellers will likely increase the bearish bets into new lows.
Upcoming Events
This week is basically empty on the data front with just the latest US Jobless Claims figures on Thursday.
