• Plummets over 100-pips on dovish BoE hike.
• BoE inflation report foresees inflation peaking in October 2017.
• Two rate hikes seen over 2-years, to bring inflation back to target.
The GBP/JPY cross faded a knee-jerk bullish spike to mid-151.00s and tumbled below the key 150.00 psychological mark post-BoE decision.
The British Pound came under some intense selling pressure after the BoE's quarterly inflation report showed that the MPC now sees inflation peaking at just over 3% in October 2017 and two more hikes seen over the forecast horizon of two-years, to bring inflation back to target.
• BoE interest rate decision: MPC stands ready to respond to changes in the economic outlook
The market participants assessed the report as dovish and a clear signal that today's rate hike, for the first time in 10-years, is not the beginning of a tightening cycle. The central bank took back an emergency cut, announced after the Brexit vote in August 2016, and raised interest rates by 25-bps to 0.50%.
With today's sharp downslide, the cross erased majority of its strong weekly gains and which might now be seen as the first sign of a possible bearish reversal.
Currently trading around the 149.85-80 region, recovering over 50-pips from session lows, traders now look forward to the BoE Governor Mark Carney's post-meeting pressure for some fresh impetus.
• BoE interest rate decision and Mark Carney’s speech – Live
Technical levels to watch
A follow through weakness below 149.25 level (BoE swing low) is likely to accelerate the fall towards the 148.00 handle before the cross eventually aims towards testing 147.30-20 strong horizontal support.
On the upside, sustained recovery back above the 150.00 handle might trigger a short-covering bounce towards the 150.80-85 supply zone, which if cleared could pave the way for an extension of the pair's upward trajectory.
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.
Recommended content
Editors’ Picks
EUR/USD retreats toward 1.0850 on modest USD recovery
EUR/USD stays under modest bearish pressure and trades in negative territory at around 1.0850 after closing modestly lower on Thursday. In the absence of macroeconomic data releases, investors will continue to pay close attention to comments from Federal Reserve officials.
GBP/USD holds above 1.2650 following earlier decline
GBP/USD edges higher after falling to a daily low below 1.2650 in the European session on Friday. The US Dollar holds its ground following the selloff seen after April inflation data and makes it difficult for the pair to extend its rebound. Fed policymakers are scheduled to speak later in the day.
Gold climbs to multi-week highs above $2,400
Gold gathered bullish momentum and touched its highest level in nearly a month above $2,400. Although the benchmark 10-year US yield holds steady at around 4.4%, the cautious market stance supports XAU/USD heading into the weekend.
Chainlink social dominance hits six-month peak as LINK extends gains
-637336005550289133_XtraSmall.jpg)
Chainlink (LINK) social dominance increased sharply on Friday, exceeding levels seen in the past six months, along with the token’s price rally that started on Wednesday.
Week ahead: Flash PMIs, UK and Japan CPIs in focus – RBNZ to hold rates
After cool US CPI, attention shifts to UK and Japanese inflation. Flash PMIs will be watched too amid signs of a rebound in Europe. Fed to stay in the spotlight as plethora of speakers, minutes on tap.