GBP

  • The BoE left interest rates unchanged as expected but with Haskel and Mann this time voting for a hold instead of a hike.
  • The employment report missed expectations with an uptick in the unemployment rate and an easing in wage growth.
  • The UK CPI missed expectations across the board but with Services inflation remaining sticky, which continues to support the BoE’s patient stance.
  • The latest UK PMIs showed the Services PMI missing expectations slightly and the Manufacturing PMI beating.
  • The market expects the first rate cut in June.

JPY

  • The BoJ finally exited the negative interest rates policy as expected at the last meeting raising interest rates by 10 bps bringing the rate to a target between 0.00-0.10%. Moreover, the central bank scrapped the yield curve control and the ETF purchases, while maintaining QE in place.
  • The latest Unemployment Rate missed expectations although it continues to hover around cycle lows.
  • The Japanese PMIs improved further for both the Manufacturing and Services measures although the former remains in contractionary territory.
  • The Japanese wage data beat expectations by a big margin.
  • The Tokyo CPI, which is seen as a leading indicator for National CPI, came in line with expectations.
  • The market expects another rate hike from the BoJ this year although the timing remains uncertain.

GBPJPY Technical Analysis – Daily Timeframe

GBPJPY Technical Analysis
GBPJPY Daily

On the daily chart, we can see that GBPJPY got rejected from the upper bound of the rising channel and extended the drop as the BoE made another step towards rate cuts with the hawkish members changing their vote from a hike to a hold. The price is now approaching the lower bound of the channel where we can expect the buyers to step in with a defined risk below the bottom trendline to position for a rally back into the top trendline. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 187.96 level.

GBPJPY Technical Analysis – 4 hour Timeframe

GBPJPY Technical Analysis
GBPJPY 4 hour

On the 4 hour chart, we can see that the price recently broke out of the symmetrical triangle to the downside and it’s now retesting the lower boundary where we find the confluence of the red 21 moving average and the 61.8% Fibonacci retracement level. This is where the sellers should step in with a defined risk above the upper boundary of the pattern to position for a drop into the lower bound of the channel. The buyers, on the other hand, will want to see the price breaking above the upper bound of the triangle to position for a rally into the upper bound of the channel.

GBPJPY Technical Analysis – 1 hour Timeframe

GBPJPY Technical Analysis
GBPJPY 1 hour

On the 1 hour chart, we can see more closely the recent price action and the bearish setup around the bottom trendline of the triangle. We can see that we also have a counter-trendline now defining the current short-term uptrend. If the price were to break below the counter-trendline, we can expect the sellers to pile in more aggressively and extend the drop into the lower bound of the channel. The buyers, on the other hand, will likely continue to lean on the counter-trendline to keep on bidding the price to new highs.

Upcoming Events

Today we have the US ADP and the US ISM Services PMI. Tomorrow, we get the latest US Jobless Claims figures while on Friday we conclude the week with the US NFP report.