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 a big jump
  in the unemployment rate although the wage growth increased.
• The UK CPI beat expectations 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 August.

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 latest Japanese wage data came in line with expectations.
• 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 bounced
on the 61.8% Fibonacci retracement level around
the lower bound of the rising channel and extended the rally into the 193.00
handle. The buyers are targeting the upper bound of the channel around the
195.00 handle, but they will need to break the cycle high first to extend the
rally further. The sellers, on the other hand, might want to step in around the
cycle high with a defined risk above it to position for a drop back into the
lower bound of the channel targeting a break below it.

GBPJPY Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see the price is now at
a key resistance zone
around the 192.85 level where the pair got rejected from several times. The UK
data has been pretty strong and continues to point to higher rates for longer
for the BoE, so the buyers have the fundamentals on their side to try a
breakout. The sellers, on the other hand, will likely step in again at this
resistance to position for a drop back into the lower bound of the channel.

GBPJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the recent price action with the pair printing higher lows recently
which points to bullish momentum. If the breakout were to fail and the price
were to fall below the black trendline, the sellers will regain control and push
the price back into the lower bound of the channel as the buyers will likely
fold at that point.

Upcoming Events

Tomorrow we get the latest US Jobless Claims figures,
while on Friday we conclude the week with the Japanese CPI and the UK Retail
Sales.

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