• 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.


  • 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

GBPJPY Technical Analysis

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

GBPJPY Technical Analysis
GBPJPY 4 hour

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

GBPJPY Technical Analysis
GBPJPY 1 hour

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.