GBP/JPY. Analysis and Forecast

[Redator]

Today, Friday, the GBP/JPY pair was actively sold off as the yen strengthened after the Bank of Japan's monetary policy meeting. The release of somewhat positive data on the pound barely slowed the decline. As expected, following its two-day meeting, the Bank of Japan decided to keep the interest rate unchanged in the 0.4%–0.5% range. However, two board members voted against this decision, favoring a rate hike, which provided an additional intraday boost for the yen and pushed GBP/JPY lower.

Investors are also factoring in the likelihood of a 25-basis-point rate hike by the Bank of Japan in October, given signs of economic stability. This stance sharply contrasts with the "dovish" signals from the Bank of England, which forecasts further rate cuts, supporting the yen's outperformance against the pound and pressuring GBP/JPY lower.

However, yen bulls are likely to act cautiously, considering domestic political instability, which could prompt the Bank of Japan to delay raising rates.

In addition, today's data from Japan showed the slowest growth in the core consumer price index in nine months. In this context, statements from Bank of Japan Governor Kazuo Ueda may act as a catalyst for further GBP/JPY movement.

From a technical perspective, prices fell below the psychological level of 200.00, with the pair finding good support at 199.25 ahead of the round level of 199.00. However, the fact that oscillators on the daily chart remain positive and the 9-day EMA has not crossed below the 14-day EMA suggests the pair is not ready to give up.

Therefore, once the pair overcomes the 200.00 barrier again, it will aim for the next level at 200.35 on its way to the monthly high. If prices fail to hold the round level of 199.00 and fall below the 50-SMA, the balance of probability will shift in favor of the bears.

The material has been provided by InstaForex Company - www.instaforex.com