The BoE surprised with a 50 bps rate hike at the last meeting given the hot employment and inflation reports. At the next meeting, the BoE was expected to hike by 50 bps again due to another beat in the wages data but expectations changed in favour of a 25 bps increase as the recent UK CPI data missed expectations across the board.
On the other hand, the BoJ maintains its dovish stance despite core inflation in Japan being at a four-decades high. There are very small signs of a possible exit from the current policy, but the BoJ board members keep on dismissing any change in the near future. In fact, the BoJ is expected to keep everything unchanged at this week’s meeting, so any surprise can lead to a big appreciation in the JPY.
GBPJPY Technical Analysis – Daily Timeframe
On the daily chart, we can see that eventually we got the major pullback into the 179.92 support where we had also the confluence with the 38.2% Fibonacci retracement level. The price bounced from the support level but couldn’t extend the rally past the red 21 moving average as the sellers leant on it as dynamic resistance to position for a break below the 179.92 support. This eventually led the GBPJPY to get stuck in a range between the support and the moving average.
GBPJPY Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more closely the big pullback after the breakout of the rising wedge and now the rangebound price action between the 179.92 support and the 182.29 resistance. The levels are clear though, and it gives both buyers and sellers defined trading opportunities. In fact, if the price were to break above the resistance, we should see the buyers piling in and target a new high. On the other hand, if the price breaks below the support, the sellers should jump onboard and extend the selloff into the 175.00 handle.
GBPJPY Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the sellers might have a short term trading opportunity within the range. In fact, if the price breaks below the trendline, we should see the sellers piling in to target the support first, and upon a break lower, the 175.00 handle. More aggressive buyers though, can lean on the trendline to position for a breakout to the upside with a better risk to reward setup.
See also the video below:
