• 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
  peaked.
• The employment report showed job losses in December and
  lower than expected wage growth.
• The UK CPI beat expectations across the board, which is
  going to reinforce the BoE’s neutral stance.
• 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.

JPY

• 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
  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 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
  cycle highs.
• The market expects the BoJ to hike
  in Q2.

GBPJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see that GBPJPY broke
through the key resistance zone
around the 184.40 level and after a retest, extended the rally to new highs
with the hot UK CPI report today increasing the bullish momentum. The buyers
will look for dip-buying opportunities while the sellers should lean on the
cycle high around the 188.68 level to position for a drop back into the 178.00
handle.

GBPJPY Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price has
been diverging with the
MACD which is
generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we might see a pullback into the trendline where we
can also find the confluence with the
50% Fibonacci retracement level
and the red 21 moving average. The
sellers, on the other hand, will want to see the price breaking lower to
position for a drop into the 184.40 support and target a break below it.

GBPJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the current price action with the spike higher following the UK CPI
release. We can also see the key support zone around the 186.00 handle
highlighted by the green box. That’s where the buyers will have a better risk
to reward setup, while the sellers will know if they could start to position
for much lower prices in case we see a break.

Upcoming Events

Today, we will get the US Retail Sales and
Industrial Production data, while tomorrow we will see the latest US Jobless
Claims figures. On Friday, we conclude the week with the Japanese CPI, the UK
Retail Sales and the University of Michigan Consumer Sentiment survey.

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