- The BoE left interest rates unchanged as expected at the last meeting
with no dovish language as they reaffirmed that they will keep rates high for
sufficiently long to return to the 2% target.
- Governor Bailey pushed back against rate cuts
expectations as he said that they cannot state if interest rates have
- The latest employment report missed forecasts with wage growth
coming in much lower than expected and job losses in November.
- The UK CPI missed expectations across the board, which is
another welcome development for the BoE.
- The UK PMIs showed the Manufacturing sector falling
further into contraction while the Services sector continues to expand.
- 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 Q2 2024
- The BoJ kept its monetary policy unchanged at the last meeting with interest
rates at -0.10% and the 10 year JGB yield target at 0% with 1% as a reference
- 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 unless wage growth picks up.
- The latest Japanese CPIshowed that inflationary 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 missed expectations by a big margin
and as a reminder the BoJ is focusing on wage growth to decide whether to tweak
its monetary policy.
- The Tokyo CPI, which is seen as leading indicator
for National CPI, eased further but the Core-Core measure remains stuck at
- The market expects the BoJ to hike
rates in Q2 2024.
GBPJPY Technical Analysis –
On the daily chart, we can see that GBPJPY is now
at a key resistance around
the 184.45 level. This is where we can expect the sellers to step in with a
defined risk above the level to position for a drop into the 178.00 support.
The buyers, on the other hand, will want to see the price breaking higher to
increase the bullish bets into new highs.
Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the
range between the 178.00 support and the 184.45 resistance. The buyers will
also need to be careful as we might get a fakeout, which could be confirmed if
the price after the breakout falls and breaks below the most recent higher low
around the 182.80 level.
GBPJPY Technical Analysis –
1 hour Timeframe
On the 1 hour chart, we can see more
closely the current price action with the JPY losing ground since the miss in
the wage data. It looks more and more likely that the sellers can count only on
rate cuts from the BoE as the BoJ is unlikely to do much with lower inflation
and low wage growth. We can see that we have also a minor trendline that
is supporting the current uptrend. If we see a fakeout and the price breaks
below the trendline, the sellers are likely to pile in again targeting a break
below the 182.80 swing low.
Tomorrow we get the US CPI report and the US Jobless
Claims figures, while on Friday we conclude the week with the UK GDP and the US
This article was written by FL Contributors at www.forexlive.com.
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