GBP/JPY clocks 8-week high in Asia, breaches 2-yr long downtrend line

Omkar Godbole FXStreet Contributor

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).

	TREND INDEX	OB/OS INDEX	VOLATILY INDEX
15M	Slightly Bullish	Overbought	High
1H	Bullish	Overbought	Expanding
4H	Bearish	Neutral	High
1D	Bullish	Overbought	Expanding
1W	Bullish	Neutral	High
Updated Jul 7, 02:00 GMT

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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