GBP/JPY hasn't had enough yet, grinding into 146.50 ahead of the BoJ's Rate Statement

  • The Sterling lost its grip on Thursday, falling back into familiar lows.
  • The BoJ is the last thing standing between the GBP/JPY and a last-minute recovery to end the week.

The GBP/JPY is heading lower in early Asia trading, knocking back into 146.50 after a Thursday session that saw the pair accelerate out of a recent channel as risk appetite dries up in broader markets.

Retail Sales figures for the UK come out better than expected on Thursday, sending the GBP/JPY into recent highs at 147.80, but the ride was short-lived after a dovish European Central Bank (ECB), being piloted by Mario Draghi, pushed the possibility of a rate hike out into 2019, and the softening central bank saw risk appetite evaporate in the European markets. 

US economic figures also beat expectations by a large margin, and the chances of yet even further rate hikes this year knocked risk appetite back even further, sending risk flows piling into the safe-haven Yen and letting the riskier assets such as the Pound sputter for air.

Friday brings a Bank of Japan (BoJ) Rate Decision and Monetary Policy Statement, expected to drop sometime around 02:00 or 03:00 GMT. The BoJ is still incredibly far off from any rate hikes, and the central bank is still dedicated to their hyper-easy policy, but traders will be peering into the BoJ's language used in the policy statement all the same, looking for subtle changes to the BoJ's rhetoric.

GBP/JPY levels to watch

With the pair tumbling all the way down to 146.50, Thursday's slide could extend even further to be welcomed by last week's low of 145.85, with little in the way to challenge an extended decline into late May's bottom of 143.20. A bullish turn could still make an appearance, but bidding will be incredibly constrained by the last highs near 147.85 and 148.10.

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