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 an uptick in the unemployment rate and an easing in wage growth.
  • The UK CPI missed expectations across the board but 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 June.

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

GBPJPY Technical Analysis
GBPJPY Daily

On the daily chart, we can see that GBPJPY bounced on the 61.8% Fibonacci retracement level near the lower bound of the rising channel where we had also the red 21 moving average for confluence. The buyers extended the rally into the 193.00 handle and will certainly keep targeting the upper bound of the channel around the 195.00 handle. The sellers, on the other hand, will want to see the price reversing and breaking below the lower bound to position for a drop into the 187.96 low.

GBPJPY Technical Analysis – 4 hour Timeframe

GBPJPY Technical Analysis
GBPJPY 4 hour

On the 4 hour chart, we can see that from a risk management perspective, the buyers will have a much better risk to reward setup around the trendline where they will also find the 61.8% Fibonacci retracement level for confluence. The sellers, on the other hand, will want to see the price breaking lower to position for a drop into the lower bound of the channel eventually targeting a break below it.

GBPJPY Technical Analysis – 1 hour Timeframe

GBPJPY Technical Analysis
GBPJPY 1 hour

On the 1 hour chart, we can see more closely the recent price action with the pair bouncing on the most recent swing high level at 192.20. If we get a pullback from the current high, that’s where the buyers should pile in with a defined risk below the 192.20 level to position for a rally into new highs. The sellers, on the other hand, will want to see the price breaking lower to position for a drop into the trendline around the 191.50 level.

Upcoming Events

Today we get the US CPI report and the FOMC Minutes. Tomorrow, we will have the US PPI and the latest US Jobless Claims figures. On Friday, we conclude the week with the UK GDP and the University of Michigan Consumer Sentiment Survey.