• GBP/JPY struggles to gain any meaningful traction and consolidates near a two-week high.
  • Bets for additional rate hikes by the BoE underpin the British Pound and acts as a tailwind.
  • A modest pickup in demand for the JPY keeps a lid on any meaningful upside for the cross.
  • The BoJ’s dovish stance might continue to weigh on the JPY and favours the GBP/JPY bulls.

The GBP/JPY cross oscillates in a narrow band around the 168.00 mark through the early European session on Tuesday and consolidates its recent gains to a two-week high.

Expectations that the Bank of England will continue hiking interest rates to curb inflation, along with subdued US Dollar demand, benefit the British Pound and offers support to the GBP/JPY cross. That said, a bleak outlook for the UK economy acts as a headwind for the Sterling. It is worth mentioning that the UK Office for Budget Responsibility (OBR) now projects the UK GDP to slump by 1.4% next year as compared to a growth of 1.8% forecast in March.

Apart from this, a modest pickup in demand for the Japanese Yen keeps a lid on any meaningful upside for the GBP/JPY cross, at least for the time being. The downside potential, however, seems limited amid a dovish stance adopted by the Bank of Japan. In fact, BoJ Governor Haruhiko Kuroda reiterated on Friday that the central bank will stick to its monetary easing to support the economy and achieve the 2% inflation target in a sustained, stable fashion.

This marks a big divergence in comparison to other major central banks, which should continue to weigh on the JPY. In the absence of any major market-moving economic releases, the fundamental backdrop suggests that the path of least resistance for the GBP/JPY cross is to the upside. That said, the lack of strong follow-through buying warrants some caution before positioning for an extension of the recent bounce from the 100-day SMA support tested last week.

Technical levels to watch

GBP/JPY

Overview
Today last price 167.99
Today Daily Change 0.05
Today Daily Change % 0.03
Today daily open 167.94
 
Trends
Daily SMA20 167.55
Daily SMA50 164.96
Daily SMA100 164.04
Daily SMA200 162.4
 
Levels
Previous Daily High 168
Previous Daily Low 166.11
Previous Weekly High 167.32
Previous Weekly Low 163.7
Previous Monthly High 172.14
Previous Monthly Low 159.73
Daily Fibonacci 38.2% 167.28
Daily Fibonacci 61.8% 166.83
Daily Pivot Point S1 166.7
Daily Pivot Point S2 165.45
Daily Pivot Point S3 164.8
Daily Pivot Point R1 168.59
Daily Pivot Point R2 169.25
Daily Pivot Point R3 170.49

 

 

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