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 employment report beat expectations across the board with a positive revision to the December’s negative payroll figure.
- The UK CPI missed expectations across the board but with Services inflation remaining sticky, which continues to support the BoE’s patient stance.
- The latest UK PMIs improved from the prior month with the Services PMI beating expectations and the Manufacturing PMI missing.
- The latest UK Retail Sales beat expectations across the board by a big margin.
- The market expects the first rate cut in June.
JPY
- The BoJ kept its monetary policy unchanged as expected at the last meeting with interest rates at -0.10% and the 10 year JGB yield target at 0% with 1% as a reference cap.
- The Japanese CPI beat expectations although all measures eased further from the prior readings.
- 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 recently although there was a pick up from the prior reading.
- The market expects the BoJ to hike rates in Q2.
GBPJPY Technical Analysis – Daily Timeframe
On the daily chart, we can see that GBPJPY continues to maintain a bullish bias as the price keeps on printing higher highs and higher lows. The pair has pulled back into the recent swing high level where we can also find the blue 8 moving average for confluence. This is where we can expect the buyers to step in with a defined risk below the level to position for a rally into new highs. The sellers, on the other hand, will want to see the price breaking lower to position for a drop into the 188.67 support.
GBPJPY Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a key trendline where the buyers have been leaning onto for a while. The trendline got breached today but the buyers will have another opportunity to position for new highs at the 190.05 level where we have also the 38.2% Fibonacci retracement level adding extra confluence. The sellers, on the other hand, will need the price to break below the 190.05 level to start targeting the 188.67 support.
GBPJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price diverged with the MACD recently which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, the target for the pullback should be right around the 109.05 support. Alternatively, if the price were to break above the downward counter-trendline, the buyers will likely pile in to position for new highs. The sellers, on the other hand, will likely lean on the downward trendline to position for a break below the support with a better risk to reward setup.
Upcoming Events
Tomorrow we will see the Japanese Industrial Production and Retail Sales and later in the day, the US PCE and the latest US Jobless Claims figures. On Friday, we conclude the week with the Japanese Unemployment Rate and the US ISM Manufacturing PMI.
