BOE Rate Cut and Verbal Intervention Drag GBP/JPY Down
The GBP/JPY currency pair lost its shine the previous week due to the weak Pound sterling. It dropped to a low of 196.74 and is currently trading around 198.24. The Potential Reversal Zone (PRZ) is set at 200.20.
On November 7, 2024, the Bank of England (BoE) announced a 25 basis points reduction in interest rates, bringing the rate down from 5% to 4.75%. This decision was widely anticipated as part of ongoing adjustments in monetary policy to respond to economic conditions. Despite the rate cut, the BoE expressed concerns about rising inflation due to recent budget measures. While the UK's inflation rate had fallen to 1.7% in September—below the government’s target of 2%—upcoming fiscal policies are expected to contribute to an increase in inflation.
Market eyes UK Claimant count change (Nov 12th, 2024) and UK GDP growth rate (Nov 14th, 2024) this week for further movement.
Technical Overview:
The GBP/JPY is trading above both short-term and long-term moving averages, which suggests a downward trend. The immediate resistance level is at 199. If the price breaks this level, it could rise toward 199.60, or even 200.20. Support is at 197, and if that fails, the price could drop to 196.50 or 195.40.
Indicator Analysis:
The CCI and ADX indicators suggest a neutral trend right now.
Trading Recommendation:
Consider buying above 200.20 with SL around 199 and aim for a target price of 205.
