- The British pound lost 300 pips, down to 153.00 as a result of the Bank of England’s decision to keep rates unchanged at 0.10%.
- The Bank of England’s decision is based on a weaker labor market, as the licensing program ended in September.
- GBP / JPY: The key support / resistance area of ​​153.50, a daily close above, would keep the bulls in control, otherwise the bears.
The GBP/JPY it is plummeting, down 1.50%, trading at 153.56 during the American session at the time of writing. Market sentiment is optimistic as the Federal Reserve said it would begin cutting bond asset purchases by $ 15 billion in mid-November while delaying raising interest rates. Investors used that as a signal to keep pushing stocks to record highs, while in the forex market, risk-sensitive currencies are down against the dollar.
Returning to GBP / JPY, on Thursday, the Bank of England’s (BoE) Monetary Policy Committee (MPC) decided to keep rates unchanged at 0.10%, despite some members, including BoE Governor Bailey, saying your concern about high inflation in previous weeks. the meeting.
The reason for keeping the rate unchanged is that “it will be necessary to raise the bank rate in the coming months if the data, especially the employment data, are in line with the forecast,” according to the MPC statement. Furthermore, they added that “the MPC still sees value in waiting for official labor market data after the end of the permit, before deciding on a stricter policy.”
As for asset purchases, the bank stood at £ 895 billion. Regarding high levels of inflation, the Bank of England “forecasts that inflation will peak at 4.80% in the second quarter of 2022.” In addition, the UK central bank forecasts show a two-year inflation of 2.23%, based on market interest rates.
GBP / JPY Price Forecast: Technical Outlook
Daily chart
GBP / JPY price action on Thursday shows investors were strongly positioned towards a rate hike from the BoE, but the British pound collapsed due to disappointment from the BoE. The average daily range (ADR) for the day is 300 pips, as GBP / JPY fell from 156.00 to 153.00.
It is worth noting that the pair briefly approached the 50-day moving average (DMA) at 153.00 and rebounded as the market found buyers around that level. However, if the GBP / JPY bulls wanted to stay in control, they would need a daily close above the July 29 high of 153.50. In that result, a retest towards 154.00 is at stake.
On the other hand, failure in the aforementioned would open the door to another 153.00 challenge. A breakout of the latter would open the door to further losses, exposing the 100 DMA at 152.60, followed by the 200 DMA at 151.74.
Technical levels
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