GBP

  • The BoE left interest rates unchanged as expected but with Haskel and Mann this time voting for a hold instead of a hike.
  • The employment report missed expectations with a big jump in the unemployment rate although the wage growth increased.
  • The UK CPI beat expectations with Services inflation remaining sticky, which continues to support the BoE’s patient stance.
  • The latest UK PMIs showed the Services PMI beating expectations and the Manufacturing PMI missing forecasts and slipping back into contraction.
  • The UK Retail Sales missed expectations across the board.
  • The market expects the first rate cut in August.

JPY

  • The BoJ finally exited the negative interest rates policy as expected at the last meeting raising interest rates by 10 bps bringing the rate to a target between 0.00-0.10%. Moreover, the central bank scrapped the yield curve control and the ETF purchases, while maintaining QE in place.
  • The latest Unemployment Rate missed expectations although it continues to hover around cycle lows.
  • The Japanese PMIs improved further for both the Manufacturing and Services measures although the former remains in contractionary territory.
  • The latest Japanese wage data came in line with expectations.
  • The Japanese CPI came in line with expectations.
  • The market expects another rate hike from the BoJ this year although the timing remains uncertain.

GBPJPY Technical Analysis – Daily Timeframe

GBPJPY Technical Analysis
GBPJPY Daily

On the daily chart, we can see that GBPJPY fell once again into the lower bound of the channel where the buyers piled in to push the price back into the highs. The pair continues to get rejected from the 193.00 resistance and this led to a rangebound price action. The buyers will need to break through the level to increase the bullish bets into new highs, while the sellers will look for a break below the lower bound of the channel to position for a drop into the 187.96 level.

GBPJPY Technical Analysis – 4 hour Timeframe

GBPJPY Technical Analysis
GBPJPY 4 hour

On the 4 hour chart, we can see more clearly the range between the 193.00 resistance and the 190.00 support. The market participants will likely continue to play the range by selling at resistance and buying at support until we get a catalyst to trigger a breakout on either side.

GBPJPY Technical Analysis – 1 hour Timeframe

GBPJPY Technical Analysis
GBPJPY 1 hour

On the 1 hour chart, we can see that the latest push higher diverged with the MACD, which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it might be a signal for another reversal from the resistance into the support. The sellers should step in around these levels with a defined risk above the resistance to position for a break below the lower bound of the channel with a better risk to reward setup. The buyers, on the other hand, should wait to buy around the support.

Upcoming Events

Tomorrow we will see the latest US Jobless Claims figures. On Friday we conclude the week with the BoJ Rate Decision, the Tokyo CPI and later in the day, the US PCE report.