GBP/JPY oscillates in a range just below multi-year top, awaits UK CPI and BoE later this week


  • 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

GBP/JPY

Overview
Today last price 181.82
Today Daily Change -0.05
Today Daily Change % -0.03
Today daily open 181.87
 
Trends
Daily SMA20 174.64
Daily SMA50 171.02
Daily SMA100 166.41
Daily SMA200 165.13
 
Levels
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

 

 

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