GBPJPY Technical Analysis – Waiting for the BoE

<p>The <a href="https://www.forexlive.com/news/uk-june-cpi-79-vs-82-yy-expected-20230719/">UK CPI</a> missed expectations across the board and
triggered a big repricing in interest rates expectations. In fact, the market
was pricing a higher chance of a 50 bps hike prior to the report given the
higher wages data in the previous UK <a href="https://www.forexlive.com/news/uk-june-payrolls-change-9k-vs-23k-prior-20230711/">employment report</a>. Now, the market sees a higher
chance that the BoE hikes by 25 bps today.</p><p>On the other hand, the <a href="https://www.forexlive.com/centralbank/boj-announce-no-change-to-yield-curve-control-ycc-and-no-monetary-policy-change-20230728/">BoJ kept everything unchanged</a> as expected but implicitly tweaked
the YCC policy keeping the target band unchanged but giving more flexibility
with a hard cap at 1.00%. So, they basically widened the YCC band without
stating it explicitly. This has created lots of volatility in the JPY, but
eventually led to a fast depreciation as the market probably expected something
more. </p><p>GBPJPY Technical Analysis –
Daily Timeframe</p><p>On the daily chart, we can see the big downward
spike caused by the Nikkei leak on the BoJ YCC tweak the day prior to the
policy decision. We then saw a huge rally soon after as the BoJ indeed tweaked
the YCC policy. This could have been a “sell the fact” move or the market
expected something more. The pair maintains a bearish bias for now as the
market is likely to expect more from the BoJ in the next months. </p><p>GBPJPY Technical Analysis –
4 hour Timeframe</p><p>On the 4 hour chart, we can see that after the huge
rally into the previous resistance at
182.29, the price probed above it but eventually fell back lower. We should see
more sellers piling in here targeting the support at 179.92 especially if
today’s BoE policy decision results more skewed to the dovish side. </p><p>GBPJPY Technical Analysis –
1 hour Timeframe</p><p>On the 1 hour chart, we can see that a
good resistance zone for the sellers would be the previous swing low level
around 181.75 where we can also find the 38.2% <a href="https://www.forexlive.com/Education/technical-analysis-using-fibonacci-retracements-20220421/">Fibonacci
retracement</a> level. The buyers, on the other hand,
will want to see the price breaking above the 182.29 resistance again to start
piling in and target higher highs. </p><p>Upcoming Events</p><p>Today
the market will be focused on the BoE policy decision and later the US Jobless
Claims and ISM Services PMI data. Tomorrow, on the other hand, all eyes will be
on the US NFP report. Strong data should raise global yields and lead to more
JPY weakness, while weak readings should have the opposite effect and lead to
more downside for GBPJPY. A dovish hike by the BoE should also result in a
lower GBPJPY. </p>

This article was written by FL Contributors at www.forexlive.com.