- GBP/JPY is seen consolidating its recent strong gains to the highest level since December 2015.
- The BoJ-BoE policy divergence is seen as a key factor that continues to lend support to the cross.
- Bulls now await the UK consumer inflation figures and the BoE meeting before placing fresh bets.
The GBP/JPY cross enters a bullish consolidation phase on Monday and oscillates in a narrow range around the 181.80-181.25 area, or just below its highest level since December 2015 touched during the Asian session.
The Japanese Yen (JPY) continues to be undermined by the Bank of Japan's (BoJ) dovish stance, which, in turn, is seen as a key factor acting as a tailwind for the GBP/JPY cross. It is worth recalling that the Japanese central bank decided to leave its ultra-loose policy settings unchanged on Friday and kept intact its view that inflation will slow later this year. As was anticipated, the BoJ held its short-term interest rate target at -0.1% and made no changes to its yield curve control policy to support the fragile domestic economy.
In contrast, the Bank of England (BoE) is expected to hike the benchmark rates by 25 bps on Thursday, to 4.75% or the highest since April 2008. Moreover, the markets are pricing in the possibility of a bigger, 50 bps lift-off, which, continues to lend support to the British Pound and the GBP/JPY cross. Bulls, however, seem reluctant to place fresh bets and prefer to move to the sidelines ahead of this week's key data/central bank event risks - the release of the latest consumer inflation figures from the UK and the BoE policy meeting.
Apart from this, a generally softer tone around the equity markets offers some support to the safe-haven JPY and contributes to capping the upside for the GBP/JPY cross, at least for the time being. That said, the aforementioned fundamental backdrop suggests that the path of least resistance for spot prices is to the upside and any meaningful pullback might still be seen as a buying opportunity. In the absence of any relevant market-moving economic releases on Monday, the cross seems more likely to prolong its sideways consolidative price move.
Technical levels to watch
|Today last price||181.82|
|Today Daily Change||-0.05|
|Today Daily Change %||-0.03|
|Today daily open||181.87|
|Previous Daily High||182.04|
|Previous Daily Low||178.83|
|Previous Weekly High||182.04|
|Previous Weekly Low||174.36|
|Previous Monthly High||174.28|
|Previous Monthly Low||167.84|
|Daily Fibonacci 38.2%||180.82|
|Daily Fibonacci 61.8%||180.06|
|Daily Pivot Point S1||179.78|
|Daily Pivot Point S2||177.7|
|Daily Pivot Point S3||176.57|
|Daily Pivot Point R1||183|
|Daily Pivot Point R2||184.13|
|Daily Pivot Point R3||186.21|
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.