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
  at the last meeting 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.
• The latest Unemployment Rate missed expectations although it
  continues to hover 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 Tokyo CPI, which is seen as a leading
  indicator for 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 Timeframe

On the daily chart, we can see that GBPJPY got
rejected from 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. The price is now approaching the lower bound
of the channel where we can expect the buyers to step in with a defined risk
below the bottom trendline to
position for a rally back into the top trendline. The sellers, on the other
hand, will want to see the price breaking lower to increase the bearish bets
into the 187.96 level.

GBPJPY Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price recently
broke out of the symmetrical triangle to the
downside and it’s now retesting the lower boundary where we find the confluence of the
red 21 moving average and the
61.8% Fibonacci retracement level.
This is where the sellers should step in with a defined risk above the upper
boundary of the pattern to position for a drop into the lower bound of the
channel. The buyers, on the other hand, will want to see the price breaking
above the upper bound of the triangle to position for a rally into the upper
bound of the channel.

GBPJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the recent price action and the bearish setup around the bottom
trendline of the triangle. We can see that we also have a counter-trendline now
defining the current short-term uptrend. If the price were to break below the
counter-trendline, we can expect the sellers to pile in more aggressively and
extend the drop into the lower bound of the channel. The buyers, on the other
hand, will likely continue to lean on the counter-trendline to keep on bidding
the price to new highs.

Upcoming Events

Today we have the US ADP and the US ISM Services
PMI. Tomorrow, we get the latest US Jobless Claims figures while on Friday we
conclude the week with the US NFP report.

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