GBP/JPY broke the 149.00 handle as UK’Hammond sees inflation higher in a year

GBP/JPY is trading at around 149.13 up almost 1% as earlier on Tuesday the UK Finance Minister Philip Hammond presented the Spring Budget statement before the Parliament where he was pretty optimistic about the future of the UK. 

He said that the “Office for Budget Responsibility (OBR) sees continued job growth in coming years”. Regarding the Bank of England´s  inflation target, he was also optimistic by saying: “Inflation is seen falling to BoE target within a year”. He also added that the budget deficit will be £10b lower compared with 2010. 

Japan is being struck by a political scandal involving the prime minister Abe and his wife, allegedly, regarding selling  government land in Osaka at ultra-low prices. The finance minister admitted that he had altered the sales document by removing the names of Abe and his wife. The political rivals of Abe are rather unforgiving:

“Even if Aso resigns to take the blame, that won’t be enough for the public. The Abe cabinet should resign en masse,” said a member of the main opposition Constitutional Democratic Party of Japan. 

The flight to safety,  with traders buying Yen, was especially felt on Monday when the news broke out, but didn’t especially affected the GBP/JPY pair. 

GBP/JPY daily chart

The GBP/JPY tested the 149.39 level, the 38.2% Fibonacci retracement from the February to March downtrend, finding resistance in the February consolidation zone. The Guppy is now trading above its 200 daily SMA, which is considered a bullish sign. The next resistance is the 151.00 level, the 50% Fibonacci retracement and the 100 daily SMA, followed by the 152.00 level, the 62.8% Fibonacci retracement. To the downside, support is seen at 148.00 which is the open of the day (Tuesday) and the 23.6% Fibonacci retracement, followed by the 146.00 psychological level. After the ABCD move made from the low on March 2nd, it could be reasonable to expect some profit taking from the bulls, especially at the 32.8% Fibonacci retracement scaling point. However, the bulls have broken the 149.00 handle and are now consolidating just above it, proabably eyeing the 150.00 figure.