• 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.
• The latest 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 improved for both the Manufacturing and
  Services measures although the former remains in contractionary territory.
• 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 as expected 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 but he’s becoming more optimistic on
  achieving their 2% target.
• The Japanese CPI eased further across all measures
  which makes it even harder to expect a rate hike from the BoJ anytime soon.
• The latest Unemployment Rate remained unchanged near cycle lows.
• The Japanese PMIs improved for both the Manufacturing
  and Services measures although the former remains in contractionary territory.
• 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.

GBPJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see that GBPJPY broke
through the key resistance around
the 184.30 level and rallied all the way back to the cycle high at 188.68 where
it stalled. This is where the sellers are likely to step in with a defined risk
above the high to position for a drop back to the 184.30 level. The buyers, on
the other hand, will want to see the price breaking higher to increase the
bullish bets into new highs.

GBPJPY Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the pair has
been trading inside a rising channel with the price recently pulling back and
bouncing from the lower bound of the channel where we had also the 38.2% Fibonacci retracement level
for confluence. This is
where the buyers stepped in with a defined risk below the Fibonacci level to
position for a break above the cycle high. The sellers, on the other hand, will
want to see the price breaking below the Fibonacci level to increase the
bearish bets into the 184.30 support.

GBPJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the setup around the cycle high with the key support around the 187.50
level highlighted by the green box. If the price breaks above the cycle high,
the buyers might increase the bullish bets. The support zone will be the last
line of defence for the buyers as a break below it should see the sellers
piling in more aggressively and increasing the bearish momentum.

Upcoming Events

Today the main event will be the US PMIs. Tomorrow,
we have the Advance US Q4 GDP and the latest US Jobless Claims figures.
Finally, on Friday we conclude the week with the Tokyo CPI and the US PCE
report.

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