The GBPJPY currency pair has garnered significant attention in recent months, showcasing a strong performance at the onset of the year with four consecutive months of gains.
The allure of potentially higher interest rates in the U.K. has propelled demand for British Pound-denominated assets, bolstering the Pound against the Yen. However, May has seen a slight dip in the pair, currently trading 1.66% lower for the month. Despite this, recent days have witnessed a rebound, signalling resilience after a sharp 3% decline last week.
Trader’s focus now shifts to the upcoming interest rate decision by the Bank of England (BOE) scheduled for Thursday. This pivotal announcement is poised to influence the trajectory of the GBPJPY pair, with market participants eagerly anticipating the BOE’s stance on monetary policy. As traders brace for potential shifts in interest rates and accompanying policy guidance, the GBPJPY pair remains poised for further volatility in the days ahead, reflecting the interplay between economic fundamentals and market sentiment.
Technical
The GBPJPY pair exhibits noteworthy price action, rebounding from a sharp selloff and converging with the 100-day moving average, indicating a potential shift in momentum.
The selloff, initiated from the 197.421 resistance level, led to a breakdown below the moving average, signalling intensified selling pressures. However, support at the 191.361 level, coupled with oversold RSI conditions, sparked a rebound, culminating in the convergence with the moving average.
Currently, the pair consolidates around the moving average, reflecting market indecision ahead of the BOE interest rate decision. Upside momentum could lead to a test of the 50% Fibonacci Retracement level, while sustained selling pressure might prompt a test of the 191.361 support level.
Summary
The GBPJPY pair rebounds from a recent selloff, converging with the 100-day moving average. Trader anticipation heightens ahead of the BOE rate decision, with the potential for further volatility. Upside momentum could target the 50% Fibonacci level, while downside pressure may lead to a retest of the 191.361 support level. The market awaits BOE’s monetary policy guidance and direction.
Sources: Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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