GBP/JPY in the Bull's Grip: Will BoJ's Cautious Stance Fuel the Rally?

The GBP/JPY  trades in a narrow range between 190.63 and 192.19 for the past two days. It hit an intraday high of 191.74 and is currently trading around 191.42. Intraday trend is bullish as long as support 188 holds.

BoJ's Takata Signals Continued Policy Adjustments

On Feb. 19, 2025, BoJ's Takata reiterated the need for continued policy tweaking to deal with potential price increases, even after the January rate hike. Japan's real interest rates remain well in the red.

Takata believes it is premature to discuss selling ETF holdings and avoided making any comments on JGB yields. He anticipates inflation getting close to the BoJ target but acknowledges the risks of a weakening Yen and rising wages.

Takata anticipates rising long-term inflation expectations and moderate consumption growth, enabling the BoJ to enjoy more policy leeway with fewer risks of market volatility.

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 a bullish trend. Immediate resistance is at 192; a breach above this level targets of 193/193.36/194/195/195.60/196.25/197. Downside support is at 191 with additional levels at 190.35/189.80/189/188.

Market Indicators

CCI (50)- Bullish

Directional movement index - Neutral

 It is recommended to buy on dips around 191 with a stop-loss at 190 for a TP of 193.