- GBP/JPY snapped a four-day winning streak and fell to the 181.40 zone.
- All eyes on UK inflation data and its impact on Wednesday’s BOE decision.
- On Tuesday, the BOJ will publish the minutes of the June meeting.
The pair GBP/JPY appears to be correcting overbought conditions on Monday ahead of a crucial week for the UK economy. In this sense, the UK Consumer Price Index (CPI) for May may have an impact on the decision of the Bank of England (BoE) on Thursday, where a rise of 25 basis points is already discounted. On the other hand, investors await the minutes of the Bank of Japan (BoJ) on Tuesday.
The British CPI in the spotlight before the BOE decision
On Wednesday, Britain’s Office for National Statistics will release CPI figures for May, which are expected to have slowed slightly. The headline data is expected to come in at 8.5%, up from 8.7% previously, showing a 0.4% monthly increase in May. The underlying data would remain at 6.8% year-on-year.
Meanwhile, markets have already priced in a 25 basis point rise on Thursday, with small chances of a higher 50 basis point rise. As for the upcoming meetings, the updated macroeconomic forecasts will play an important role in their expectations, but for now, market participants expect 25 basis point hikes for August, September, November and December, which would set the policy rate at a maximum close to 5.75%.
On the Japanese side, investors will look for clues about the Bank of Japan’s stance with the minutes of the last meeting in June, in which it was decided to maintain its ultra-loose monetary policy.
GBP/JPY Levels to Watch
The technical outlook, according to the daily chart, is clearly bullish for the cross. The pair remains above its main 20,100 and 200 SMAs, while indicators – despite seeing some correction – still remain in overbought conditions. That being said, there may be more corrections on the horizon, but the outlook suggests a more favorable outlook for the British pound.
On the downside, support levels line up at the nearest round levels of 179.00,178.50 and 178.00. To the upside, the cycle high of 182.12 reached on Friday stands as immediate resistance before uncharted territory.
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Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
