GBP

  • The BoE left interest rates unchanged as expected at the last meeting removing the tightening bias but reaffirming that they will keep rates high for sufficiently long to return to the 2% target.
  • The employment report beat expectations across the board with a positive revision to the December’s negative payroll figure.
  • The UK CPI missed expectations across the board but with Services inflation remaining sticky, which continues to support the BoE’s patient stance.
  • The latest UK PMIs showed the Manufacturing sector improving but remaining in contraction while the Services sector continues to expand.
  • The latest UK Retail Sales beat expectations across the board by a big margin.
  • The market expects the first rate cut in June.

JPY

  • The BoJ kept its monetary policy unchanged as expected with interest rates at -0.10% and the 10 year JGB yield target at 0% with 1% as a reference cap.
  • The Japanese CPI eased further across all measures which makes it even harder to expect a rate hike from the BoJ anytime soon.
  • The latest Unemployment Rate ticked lower hovering around cycle lows.
  • The Japanese PMIs improved for both the Manufacturing and Services measures although the former remains in contractionary territory.
  • The Japanese wage data missed expectations again recently although there was a pick up from the prior reading.
  • The Tokyo CPI, which is seen as a leading indicator for National CPI, fell much more than expected recently.
  • The market expects the BoJ to hike rates in Q2.

GBPJPY Technical Analysis – Daily Timeframe

GBPJPY Technical Analysis
GBPJPY Daily

On the daily chart, we can see that GBPJPY broke through the cycle high and started to consolidate. The buyers should keep on leaning on the 188.67 level to position for new highs while the sellers will want to see a breakdown to start targeting new lows.

GBPJPY Technical Analysis – 4 hour Timeframe

GBPJPY Technical Analysis
GBPJPY 4 hour

On the 4 hour chart, we can see that the 188.67 level is now a key support zone where we can also find the confluence with the trendline and the red 21 moving average. This is where we can expect the buyers to step in with a defined risk below the trendline to position for new highs. The sellers, on the other hand, will want to see the price breaking lower to invalidate the bullish setup and position for a drop into the 185.21 level.

GBPJPY Technical Analysis – 1 hour Timeframe

GBPJPY Technical Analysis
GBPJPY 1 hour

On the 1 hour chart, we can see that the price action has been pretty choppy recently but overall the pair kept on printing higher lows as the buyers remained in control. The sellers should wait for a break below the key support to regain control and have more conviction for new lows.

Upcoming Events

Today we have the FOMC Meeting Minutes on the agenda while tomorrow we get the latest UK and US PMIs, and the US Jobless Claims figures.