GBP / JPY continues consolidation pattern near 150.00, possible pennant breakout?

• GBP / JPY has not moved much on Tuesday and continues to consolidate at the 150.00 lows area.
• The pair has formed a pennant this month, suggesting that a technical breakout in either direction is on the table.
• The main events to watch this week for the pair are the BoE meeting on Thursday and the BoJ meeting on Friday.

GBP / JPY has not moved much on Tuesday, with the pair rising around 0.2% on the day, but staying within recent ranges as it consolidates just north of the 150.00 level. It’s been six sessions since the cross saw some significant volatility and trading conditions on Tuesday were subdued despite the release of the latest UK labor market report, which showed employers hiring a record number of employees in November. It also showed that the unemployment rate in October fell to 4.2%, as expected, in a further sign that the UK labor market weathered the end of the government’s leave scheme in September well.

The subdued trading conditions are not surprising given that the currency markets are waiting for a barrage of central bank events later in the week before finding any direction. The BoE will announce its decision on Thursday and the BoJ on Friday, with neither entity likely to alter the political stance. While that’s nothing new when it comes to the BoJ, it is a much more interesting story for the BoE; The bank was expected to raise rates by 15 basis points as recently as the end of November.

But since Omicron’s emergence, BoE policy makers have turned subdued, a shift that weighed on GBP / JPY and contributed to its slide from the 153.00-154.00 zone to current levels around 150.00. Amid the uncertainty of the new variant, UK data has been largely ignored and will likely be for the rest of the week; Following the strong employment report on Tuesday, the UK CPI for November comes out on Wednesday and November retail sales are released on Thursday.

Technicians suggest a breakout, either to the upside or to the downside. GBP / JPY has formed a pennant so far this month, with prices constrained between a downtrend linking late November highs, December 7 and 13 highs, and an uptrend linking 3 lows. , December 8, 9, 10 and 13. A break to the downside for whatever reason (as a pessimistic surprise from the BoE on Thursday) would likely trigger a test of the 149.00 level, while a break to the upside would trigger a push towards the 152.00 level and the 21-day moving average just below. of this area.