GBP/JPY dives below 182.70 support on hopes of a BoJ pivot

• The Pound tumbles against a stronger Yen.
• Ueda’s comments suggest that the BoJ will exit its ultra-loose policy.
• The negative risk sentiment adds pressure on the pair.

The Pound is dropping sharply against the JPY on Thursday, as comments from BoG governor Ueda have boosted hopes that the bank is ready to exit its ultra-loose monetary policy.

Ueda has mentioned the different monetary policy tools to exit the negative rates policy before meeting Japanese Prime Minister Kishida. This has been seen as the confirmation of a shift in the bank’s monetary policy which has sent the yen surging across the board.

In the UK, BoE Governor Bailey reaffirmed the bank’s commitment to keep its benchmark rate at the current levels for a long time although he acknowledged the risks for the financial stability of this policy.

Beyond that, the sour market sentiment, as Moody’s downgrade of China’s credit outlook reactivated concerns about a global economic slowdown is adding negative pressure on the pair.

Technical indicators are bearish although the strong oversold RSI suggests the possibility of a corrective reaction. Supports are at 182.00 and 181.10. On the upside, the pair might find resistance at 182.70 and 184.55.
 

Technical levels to watch