GBP/JPY Price Analysis: Bulls remain in action as BoJ to consider a continuation of dovish policy

The GBP/JPY pair is working on keeping its auction above 167.50 in the early Asian session. The cross is broadly advancing from Friday as investors are expecting the continuation of interest rate hikes from the Bank of England (BoE) considering the fact that United Kingdom’s inflation is not willing to ditch the double-digit figure.

Labor shortage and food inflation have remained major drivers for stick UK inflation, which is why BoE policymakers are going through sleepless nights. Monthly UK’s Retail Sales contracted by 0.9% while the street was anticipating a contraction by 0.5%, which indicates that households are feeling the pain of inflation-adjusted prices of goods and services.

Meanwhile, new Bank of Japan (BoJ) Governor Kazuo Ueda is in favor of continuing the dovish policy stance to keep the inflation rate steadily above 2%.

On a six-hour scale, GBP/JPY showed a V-shape recovery after getting support from the lower portion of the Rising Channel chart pattern. Every pullback in the aforementioned chart pattern is considered as buying opportunity by the market participants. The Pound Sterling is driving the cross towards the horizontal resistance plotted from 13 December 2022 high at 169.28.

The Pound Sterling has managed to drive cross sustainably above the 20-period Exponential Moving Average (EMA) at 166.94, indicating that the short-term trend is bullish.

Meanwhile, the Relative Strength Index (RSI) (14) rebounded after sensing support near 40.00, signaling that the downside momentum was defended confidently.

Going forward, a decisive move above April 19 high around 168.00 will drive the cross 13 December 2022 high at 169.28 followed by November 02 high at 170.33.

On the flip side, a breakdown below April 21 low at 165.52 will strengthen the downside bias and will expose the cross to April 10 low at 164.00 and April 05 low at 162.78.

GBP/JPY six-hour chart