The GBP/JPY trades flat GBP/JPY is staying below 193.50 because of the strong expectations around the Bank of Japan's policy direction. It hit an intraday high of 193.76 and is currently trading around 193.147. Intraday trend is bearish as long as resistance 195 holds.
On 23-24 January 2025, the BoJ met and decided to hike the overnight call rate by 25 basis points to 0.50%. This is a long-awaited interest rate increase for 17 years in a row that marks a shift from their period of very low rates. The move was widely anticipated as inflation has continued to rise, especially in food and fuel, which was running at 3.8% annual wholesale inflation in December. BoJ Governor Kazuo Ueda said the central bank will pay close attention to upcoming data in determining whether it needs to continue to make adjustments to its monetary policy based on the economy and inflation trends. Rate increases are likely to be modest and contingent on the result of spring wage talks that might determine consumer spending. Following this announcement, the Japanese yen strengthened, and the yields on Japanese government bonds increased, which means there is more confidence in the BoJ's policies.
Technical Analysis of GBP/JPY
The GBP/JPY pair is trading above 34 and 55 EMA (Short-term) and 200 EMA (long-term) on the 4-hour chart, confirming an overall up trend. Immediate resistance is at 194; a breach above this level targets of 195/195.60/196.25/197. Downside support is at 193.50 with additional levels at 193/192/191.39/190/188.70/188.
Market Indicators
CCI (50)- Bullish
Directional movement index - Neutral
It is recommended to sell on rallies around 193.45-47 with a stop-loss at 194.10 for a TP of 190.
