- GBP/JPY continues to trade steadily and flips either side of the 163.00 level.
- The pair is in standby mode ahead of this week’s pivotal BoE meeting on Thursday.
- For now, the 21 DMA around $163.50 offers strong resistance.
The GBP/JPY it continues to trade steadily and flips either side of the 163.00 level, as has been the case since the start of the week, as traders keep their powder dry ahead of key event risk later this week. At current levels in the 162.60 area, the GBP/JPY cross is trading sideways on the day and modestly lower on the week, with the 21-day moving average just above 163.50 continuing to act as a ceiling, as has been the case. the case since last Thursday.
The BoE will announce the policy on Thursday, with analysts expecting a 25bp rate hike. Given the BoJ’s continued insistence that it remains premature to discuss moving away from its ultra dovish policy stance for the time being, Thursday’s rate hike by the BoE will mark a further divergence in the two banks’ monetary policy stance.
While some might argue that this supports GBP/JPY’s rise, the BoE’s guidance on the outlook for future rate hikes and the tone of the economy will likely be more important than the expected rate hike itself. The BoE has been sounding more dovish on the economy in recent weeks as the UK goes through its worst cost of living crisis in decades and, with recent data showing the punitive impact this is having on consumption and confidence consumer, the BoE may soften its tone on the need for further rate hikes.
GBP/JPY traders will also be watching for trends in broader risk appetite over the course of the week, with Federal Reserve tightening and US jobs data also on the horizon. point of view. Sentiment in the global equity space, to which the GBP/JPY pair is usually quite sensitive, remains tense and any further decline could push the pair back towards last week’s lows below 160.00 and towards its 50 moving average. days at 159.37.
Technical levels
Source: Fx Street
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