GBP/JPY drops further towards 135.00 on hopes of BOE rate cut

GBP/JPY refreshes three-day low amid increasing odds of BOE’s negative rates.
UK Chancellor Sunak is also up for helping the economic cope with the second lockdown.
US elections, FOMC adds importance to “Super Thursday”.

Anil Panchal FXStreet

GBP/JPY stays heavy around 135.30, following the recent drop to 135.13, amid Thursday’s Asian trading. Although the US elections gain major market attention, fresh chatters concerning the Bank of England’s (BOE) rate cut to the controversial negative zone weigh on the pair off-late.

Telegraph’s latest update on the BOE, relying on the anonymous sources, suggests that the “Old Lady” is up for taking the benchmark interest rate from 0.10% current to the negative region. On the other hand, Reuters’ poll indicates an additional 100 billion pounds ($129.72 billion) of the asset purchase program, taking the total to 845 billion pounds.

It should also be noted that British Chancellor Rishi Sunak is also ready to offer relief to the workers of the factories that are closed due to the second national lockdown. Telegraph mentioned likely 80% of wage payment to furloughed workers as the key announcement.

Elsewhere, Democratic Candidate Joe Biden recently won in Michigan, taking the total electoral vote counts to near to the 270 required for presidency. However, US President Donald Trump is challenging the counting process in Wisconsin and has already stopped the results from the key state like Pennsylvania until Friday.

While the uncertainty concerning the US election weighs on the treasury yields and the US dollar, equities gain from the increasing odds of further stimulus.

Looking forward, global traders will keep eyes on the Bank of England’s (BOE) multiple announcements scheduled for release at 07:00 GMT. Also important will the Tory government’s help for the British economy to battle the second nation lockdown as well as the monetary policy meeting of the US Federal Reserve. It should, however, be noted that the US election updates can keep the driver’s seat in any case.

Read: Bank of England Preview: Lockdown raises chances of negative rates, streling could suffer

Technical analysis

Unless providing a daily closing below the 50-day SMA level of 136.77, GBP/JPY bears can look to an upward sloping trend line from May 18, at 134.30 now.

Additional important levels

Overview
Today last price	135.31
Today Daily Change	-0.91
Today Daily Change %	-0.67%
Today daily open	136.22

Trends
Daily SMA20	136.5
Daily SMA50	136.97
Daily SMA100	136.55
Daily SMA200	136.04

Levels
Previous Daily High	136.7
Previous Daily Low	135.16
Previous Weekly High	137.07
Previous Weekly Low	134.41
Previous Monthly High	137.86
Previous Monthly Low	134.41
Daily Fibonacci 38.2%	136.11
Daily Fibonacci 61.8%	135.75
Daily Pivot Point S1	135.36
Daily Pivot Point S2	134.49
Daily Pivot Point S3	133.82
Daily Pivot Point R1	136.89
Daily Pivot Point R2	137.56
Daily Pivot Point R3	138.43

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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