- GBP/JPY marked a volatile move to refresh intraday high before renewing the daily bottom on BOJ’s status-quo.
- BOJ matches market forecasts and announces no change in the monetary policy.
- Firmer yields, GBP traders’ caution ahead of the BOE also play their roles.
- BOE is expected to announce 0.50% rate hike but 75 bps move could please pair bulls.
GBP/JPY dribbles around 162.40 after marking a volatile move to refresh daily limits on the Bank of Japan’s (BOJ) monetary policy announcements early Thursday. In doing so, the cross-currency pair remains around the lowest levels since September 05 while waiting for the Bank of England (BOE).
BOJ kept the short-term interest rate target at -0.1% while directing 10-year Japanese Government Bond (JGB) yields toward zero, as expected, during September’s monetary policy. The Japanese central bank also concluded its pandemic relief stimulus: "BOJ decided to phase out pandemic funding program, shift to fund provision step that meets a wide range of financing needs.”
Also read: BOJ: Japan's core consumer inflation likely to accelerate toward year-end
On the other hand, firmer yields also propel the yen and keep the GBP/JPY mildly bid on a daily basis. That said, the US 10-year Treasury yields bounce back towards the 11-year high marked the previous day, up three basis points (bps) near 3.55% whereas the 2-year counterpart rises 0.75% intraday to 4.085% at the latest, near the highest levels in 15 years.
The firmer bond coupons could be linked to the market’s rush for risk-safety amid the central bank’s aggression and geopolitical fears emanating from Russia.
On Wednesday, the US Federal Reserve (Fed) announced 75 basis points (bps) of a rate hike, the third one in a line of such kind, as it wants to tame inflation fears even at the cost of a “sustained period of below-trend growth” and a softening in the labor market. Fed Chairman Jerome Powell also signaled that the way to tame inflation isn’t painless ahead.
Elsewhere, Russian President Vladimir Putin’s announcement to mobilize partial troops also reignited the Ukraine-linked geopolitical fears and the supply-crunch woes. In a reaction, Ukrainian President Volodymyr Zelensky said Ukrainian neutrality is out of the question and he rules out that a settlement can happen on a different basis than the Ukrainian peace formula. On the same line were the comments from the Group of Seven (G7) leaders who confirmed cooperation on support for Ukraine.
GBP/JPY traders will pay attention to the BOE moves as the “Old Lady”, as it is popularly known, is expected to announce 50 basis points (bps) rate hikes amid increasing inflation fears. However, the BOE’s peers from the US, Sweden and Brazil have recently announced a 0.75% rate increase and the central bank is under pressure to take a big move, even if the latest UK statistics don’t support the claim, which in turn hints at a positive surprise from the British central bank and a corrective bounce of the pair.
Technical analysis
A clear downside break of the four-month-old ascending trend line, around 161.70 by the press time, becomes necessary for the GBP/JPY pair to aim for the 200-DMA support near 160.30.
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 steady below 1.0800 after US PCE meets expectations
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair barely reacted to US PCE inflation data, with the Greenback shedding some pips. Fed Chair Jerome Powell set to speak ahead of the weekly close.
GBP/USD hovers around 1.2620 in dull trading
GBP/USD trades sideways above 1.2600 amid a widespread holiday restraining action across financial markets. Investors took a long weekend ahead of critical United States employment data next week. Fed Chair Powell coming up next.
Gold price sits at all-time highs above $2,230
Gold price holds near a fresh all-time high at $2,236 in thinned trading amid the Easter Holiday. Most major world markets remain closed, although the United States published core PCE inflation, the Federal Reserve’s favorite inflation gauge.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.