GBP/JPY breaks the falling channel on BOE rate hike talk

GBP/JPY breached the falling channel to the upside and clocked a high of 149.07 as investors ignore political uncertainty in the UK and focus on increasing the odds of a BOE rate hike in November.

BOE Nove rate hike probability rises to 75%

Reuters report says, the money markets are already pricing in more than 75 percent probability of a hike at the November inflation report.

On the surface, a 25 basis move looks like a rate hike, although it could be called as unwinding of post-Brexit stimulus. Most economists do not see a Fed-like monetary policy normalization in the UK. The scope is limited due to Brexit uncertainty and consumer debt problems.

Still, the Pound remains bid as investors continue to price-in a possible move in November.  Meanwhile, Yen is likely to remain under pressure if European equities maintain the risk-on tone.

GBP/JPY Technical Levels

The pair was last seen trading around 148.94. A break above 149.28 (Oct 2 low) would open doors for 149.75 (Sep 25 low) and 150.00 (psychological level). On the other hand, breakdown of support at 148.72 (4-hour 50-MA) would expose 147.84 (support on 4-hour chart). A violation there would expose 147.02 (4-hour 200-MA).

  TREND INDEX OB/OS INDEX VOLATILY INDEX
15M Bullish Neutral High
1H Bullish Overbought Expanding
4H Bullish Overbought Shrinking
1D Bullish Neutral Low
1W Bearish Neutral High

 

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