The GBP/JPY traded in a narrow range between 188.15 and 190.31 in the past week. It hit an intraday low of 187.68 and is currently trading around 189.20. Intraday trend is bearish as long as resistance support 190.35 holds.
Bank of England Deputy Governor Dave Ramsden urged a "cautious and gradual" route to interest rate reductions, referencing heightened economic uncertainty from rising inflation and sluggish growth. He referenced a shift in inflation risks to "two-sided," or both inflationary and disinflationary pressures. Ramsden also referenced an eight-month high in pay growth as a potential source of inflation persistence. He was hesitant about the UK labor market outlook, suggesting that shifting conditions may necessitate a review of the rate-cutting rhythm. These remarks indicate the Bank of England's cautious monetary policy response amid prevailing economic uncertainties, following a recent rate cut to 4.5%.
Technical Analysis Points to Further Downside
The GBP/JPY pair is trading below 34 and 55 EMA (Short-term) and 200 EMA (long-term on the 4-hour chart, confirming a bearish trend. Immediate resistance is at 190.35, a breach above this level targets of 190.64/191/192. Any close above 192 in the 4-hour chart confirms further bullishness. Downside support is at 188 with additional levels at 187.65/187.25/186/185.
Market Indicators
CCI (50)- Neutral
Directional movement index - Neutral.
It is recommended to sell on rallies around 189.48-50 with a stop-loss at 190.35 for a TP of 187/185.
