GBP/JPY clocks 8-week high in Asia, breaches 2-yr long downtrend line
|GBP/JPY cross jumped to an 8-week high of 147.56 after the BOJ exercised its control over the Japanese bond yields via increased bond purchases.
Falling trend line breached
The descending trend line coming from Aug 2015 high and November 2015 has been breached, although as per the textbook rules, a bullish break would be confirmed only if the end of the day close on July 31 is above the trend line hurdle.
Again, monetary policy divergence is at play here. The latest sound bites from the Bank of England (BoE) have been hawkish. Moreover, the central bank is under pressure to hike rates/at least reverse last year’s rate cut in order to curb rising inflation. On the other hand, the BoJ intervention in the bond markets today has made it clear that the central bank is in no mood to let go its ultra accommodative policy.
GBP/JPY Technical Levels
The pair was last seen trading around 147.50 levels. A break above 148.11 (May 10 high) would expose resistance at 148.46 (Dec 15, 2016 high) and 149.00 (zero levels). On the other hand, a breakdown of support at 147.26 (July 6 high of 4-hour chart) could yield a pullback to 146.64 (10-DMA on 4-hour) and 145.98 (July 4 low on 4-hour).
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