- The BoE kept interest rates
unchanged as expected at the last meeting. - The central bank is leaning towards
keeping interest rates “higher for longer”, although it keeps a door open for
further tightening if inflationary pressures were to be more persistent. - The BoE members continue to repeat
that they will keep rates high for long enough to get inflation back to target. - The latest employment report beat
expectations with wage growth remaining at elevated levels. - The recent UK CPI missed
expectations across the board, which was a welcome development for the BoE. - The UK PMIs beat expectations on
both the Manufacturing and Services measures, with the Services sector crawling
back in expansion. - The latest UK Retail Sales missed
expectations across the board by a big margin as consumer spending remains
weak. - The market expects the BoE to start
cutting rates in Q3 2024
JPY
- The BoJ kept its monetary policy basically
unchanged at the last meeting but formally widened the YCC to 1% on the 10-year
JGBs stating that it will be a reference cap. - Governor Ueda repeated once again
that they won’t hesitate to take easing measures if needed and that they are
not foreseeing sustainable price increases. - The Japanese CPIshowed that inflation pressures are easing although
they remain well above the BoJ’s 2% target. - The latest Unemployment Rate
remained unchanged near cycle lows. - The Japanese Manufacturing PMI fell
further into contraction, but the Services PMI ticked higher remaining in
expansion. - The latest Japanese wage data beat
expectations and as a reminder the BoJ is focusing on wage growth to decide
whether to tweak its monetary policy. - The market expects the BoJ to hike
rates in Q2 2024.
GBPJPY Technical Analysis –
Daily Timeframe
On the daily chart, we can see that GBPJPY is now
near the key trendline where we have also the confluence with the 50% Fibonacci
retracement level. This is where the buyers should step in with a defined risk
below the trendline to position for a rally into new highs. The sellers, on the
other hand, will want to see the price breaking lower to increase the bearish
bets into the 178.00 handle.
GBPJPY Technical Analysis –
4 hour Timeframe
On the 4 hour chart, we can see more closely the
bearish setup around the trendline and the Fibonacci level. If we do get a
bounce on the trendline, the buyers will then need to break above the
counter-trendline and the 186.30 resistance to confirm a rally into new highs.
The sellers, on the other hand, will lean on the counter-trendline to try again
a break below the major trendline.
GBPJPY Technical Analysis –
1 hour Timeframe
On the 1 hour chart, we can see that the
price is starting to diverge with the MACD right near the key trendline. This
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, the sellers will need a break below the trendline to
confirm the reversal and invalidate the bullish setup, while the buyers will
need a break above the counter-trendline to confirm the reversal and increase
the bullish bets into new highs.
Upcoming Events
Today we have another US
labour market report with the release of the US ADP data. Tomorrow, it will be
the time for the US Jobless Claims figures, while on Friday we conclude the
week with the NFP report. Weak US data is likely to weigh on global yields and
favour the JPY, while strong figures might keep the pair supported.
This article was written by FL Contributors at www.forexlive.com.