- GBP/JPY gained strong follow-through traction for the second straight session on Thursday.
- The improving COVID-19 situation in the UK continued acting as a tailwind for the sterling.
- Investors now look forward to the latest BoE policy decision for a fresh directional impetus.
The GBP/JPY cross held on to its strong intraday gains through the first half of the European session and was last seen trading near three-day tops, just above mid-152.00s.
The cross built on this week's goodish rebound from the vicinity of the 151.00 mark and gained some follow-through traction for the second consecutive session on Thursday. A combination of factors continued acting as a tailwind for the sterling.
The European Union had decided to pause legal proceedings against Britain over the Northern Ireland protocol dispute. Apart from this, the declining trend of new COVID-19 cases in the UK turned out to be another factor that underpinned the British pound.
On the other hand, a generally positive tone around the equity markets dented demand for the safe-haven Japanese yen. This, in turn, provided an additional boost to the GBP/JPY cross and contributed to the ongoing positive move back closer to weekly tops.
It will now be interesting to see if bulls are able to capitalize on the move or the GBP/JPY cross meets with some fresh supply at higher levels as the focus remains on the Bank of England meeting. The UK central bank is scheduled to announce its decision at 11:00 GMT.
The BoE is widely expected to keep interest rates on hold at 0.1%. However, the MPC vote distribution over whether to continue the QE program at the current £895 billion levels, the updated economic projections and the BoE Governor Andrew Bailey's remarks will infuse some volatility.
Technical levels to watch
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