GBP/JPY is advancing higher post resolutions of two UK-specific risk events last week – the Bank of England taper and the Scottish elections outcome. Further upside would feature a probe of the resistance line that connects July 2007’s 251.40 highs through June 2015’s 195.88 peak that comes in around 155.45, Benjamin Wong, Strategist at DBS Bank, briefs.

Taper was not overly aggressive in tone

“The BoE is unlikely to stage any imminent rate hike, with tightening only in the rear mirror if the UK sees a sustainable rise in inflation to 2% and spare capacity is being eliminated in the economy.”

“The Scottish elections were concluded with the Scottish National Party (SNP) winning 64 seats, which is one seat short of an outright majority. Without an outright majority, the UK government is unlikely to grant the SNP the right to a legal independence referendum – this has given GBP a boost.” 

“The UK is moving towards its 17 May Step Three easing of the lockdown as a positive indictment of its COVID-19 action plans (which underpins GBP).”

“There is scope for the cross to continue its advance to pivot a test of the long-term dropped resistance that connects July 2007’s 251.40 highs through June 2015’s 195.88 peak that comes in around 155.45.”

 

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