GBP/JPY Recovers to 20-Day SMA, No Sign of BOJ Pivot

• GBP/JPY jumped to 185.00, up almost 0.50% daily, recapturing the 20-day SMA.
• Expectations for Bank of England tightening remain stable, and the BOJ is likely to maintain its dovish outlook.
• Divergences in monetary policy drive the pair higher.

At the start of the week, the pair GBP/JPY It jumped towards 185.00 and recaptured the 20-day SMA of 184.60. No relevant economic data will be released in the session for either of the two countries, and monetary policy divergences favor the British pound against the Yen.

On the Pound side, the UK will have a quiet week with the final revisions to the PMIs on Tuesday the only major data. At the moment, the World Interest Rate Probabilities (WIRP) show that market participants are pricing in higher odds that the Bank of England (BoE) will hike rates by an additional 0.50% of tightening after the December meeting, resulting in a total increase to the range of 5.75%- 6%. In this sense, the expectations of a more aggressive BoE could limit the losses of the pound against its rivals.

On the other hand, the BOJ’s recent statements underscore its commitment to align monetary policy with local wage and inflation trends. In this regard, Japan will report July household spending figures on Tuesday and July cash earnings data on Friday, which will give more information to market participants and the BOJ on the current state of the economy. japanese. Unless the bank fails to see the necessary wage growth, it is likely to maintain its dovish approach, leaving the JPY vulnerable.

GBP/JPY Levels to Watch

Technical analysis on the daily chart suggests a neutral to bullish stance for GBP/JPY as the bulls work to regain their ground. The Relative Strength Index (RSI) shows a bullish bias with a positive slope above the 50 threshold, while the Moving Average Convergence (MACD) prints weaker red bars. Furthermore, the pair is above the 20,100,200-day SMA, which points to prevailing bullish strength in the broader context.

Support levels: 183.50, 183.00, 182.00.

Resistance levels: 185.00, 186.00, 187.00.

GBP/JPY Daily Chart