- A broad-based GBP strength pushed GBP/JPY to the highest level since May 2018 on Wednesday.
- The optimistic global economic outlook undermined the safe-haven JPY and remained supportive.
- Investors now eye BoE's Monetary Policy Report Hearing for some meaningful trading opportunities.
The GBP/JPY cross maintained its strong bid tone near the highest level since May 2018, with bulls awaiting a sustained move beyond the key 150.00 psychological mark.
A combination of supporting factors assisted the cross to build on the previous day's positive move and gain strong follow-through traction on Wednesday. The British pound remained well supported by the impressive pace of COVID-19 vaccinations in Britain and the UK government's plan to ease current lockdown measures. In fact, UK Prime Minister Boris Johnson unveiled a new four-step plan to end restrictions by 21 June and lifted hopes for a relatively stronger UK economic recovery.
The optimism was further fueled by Tuesday's upbeat UK employment details, which showed that the number of people claiming unemployment-related benefits unexpectedly dropped by 20K in January. Adding to this, the previous month's reading was also revised down to -20.4K from the 7K rise reported earlier. The developments further diminished odds for any further interest rate cuts by the Bank of England, which further underpinned the sterling and remained supportive of the GBP/JPY pair's momentum.
Meanwhile, the progress on US President Joe Biden's proposed $1.9 trillion stimulus package has been fueling the optimism about a swift global economic recovery. This, in turn, undermined demand for the safe-haven Japanese yen and provided an additional boost to the GBP/JPY cross. The market focus now shifts to a scheduled speech by the BoE Chief Economist Andy Haldane. Later during the early North American session, the BoE Governor Andrew Bailey and other MPC members will testify before the Treasury Select Committee, which might influence the GBP and produce some trading opportunities.
Technical levels to watch
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