GBPJPY Technical Analysis

GBP

• The BoE left interest rates unchanged as expected but with Haskel and
  Mann this time voting for a hold instead of a hike.
• The employment report missed expectations with an uptick
  in the unemployment rate and an easing in wage growth.
• 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 showed the Services PMI missing expectations
  slightly and the Manufacturing PMI beating.
• The market expects the first rate
  cut in June.

JPY

• The BoJ finally exited the negative interest rates
  policy as expected
  raising interest rates by 10 bps bringing the rate to a target between
  0.00-0.10%. Moreover, the central bank scrapped the yield curve control and the
  ETF purchases, while maintaining QE in place as expected.
• The latest Unemployment Rate remained unchanged hovering around
  cycle lows.
• The Japanese PMIs improved further for both the
  Manufacturing and Services measures although the former remains in
  contractionary territory.
• The Japanese wage data beat expectations by a big margin.
• The Japanese 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 Timeframe

On the daily chart, we can see that GBPJPY got
rejected by the upper bound of the rising channel and extended the drop as the
BoE made another step towards rate cuts with the hawkish members changing their
vote from a hike to a hold. From a risk management perspective, the buyers will
have a much better risk to reward setup around the lower bound of the channel.

GBPJPY Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price rejected
the 38.2% Fibonacci retracement level
and fell below the 191.00 support zone. The buyers will want to see the price rallying
back above the support now turned resistance to position for a rally into the
upper bound of the channel. The sellers, on the other hand, should continue to
trade into the lower bound of the channel as long as the price stays below the Fibonacci
level.

GBPJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
recent price action might have formed a head and shoulders
pattern right around the Fibonacci level. The break below the support, which was
also the neckline, might have been the confirmation of the pattern. If we get a
pullback into the support turned resistance for a retest, we can expect the sellers
to step in with a defined risk above the resistance to position for a drop into
the lower bound of the channel. The buyers, on the other hand, will want to see
the price rising above the resistance to start targeting new highs.

Upcoming Events

Today we have Fed’s Waller speaking. On Thursday, we
get the latest US Jobless Claims figures, while on Friday we conclude with the
Tokyo CPI, the US PCE and Fed Chair Powell.

This article was written by FL Contributors at www.forexlive.com.