UK:

• The BoE kept interest rates unchanged at the last meeting.
• The central bank is leaning more
  towards keeping interest rates “higher for longer” but it kept a door open for
  further tightening if inflationary pressures were to be more persistent.
• Key economic data like the latest employment report showed a very high wage growth
  despite the rising unemployment rate, but the latest UK CPI missed expectations across the board.
• The latest UK PMIs showed further contraction, especially in the
  Services sector.
• The market doesn’t expect the BoE to
  hike anymore.

Japan:

• The BoJ kept everything unchanged as expected.
• The Japanese CPI showed that inflationary pressures
  remain high with the core-core reading hovering at the cycle highs.
• The Unemployment Rate missed expectations although it
  matched the previous reading.
• The Japanese Manufacturing PMI fell further into contraction but
  the Services PMI remains in expansion.
• BoJ governor Ueda repeated that they will not
  hesitate to take additional easing measures if needed and clarified that the
  recent comment on “quiet exit” from monetary easing was misinterpreted.
• The recent Japanese wage data showed a slowing in wage growth,
  and this is something the BoJ focuses on particularly.
• The Tokyo CPI, which is seen as a leading indicator
  for national CPI, continues to fall although it remains above the BoJ target.

GBPJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the last leg
higher in GBPJPY diverged strongly
with the MACD which is
generally a sign of weakening momentum often followed by pullbacks or
reversals. The break of the trendline
confirmed the reversal and the pair is now likely to fall into the 176.32 swing
level. We can see that the sellers leant on the red 21 moving average recently
to position for a drop into the swing level and yesterday we got a spike lower
caused by the Japanese intervention as USDJPY rose above the key 150.00 level.

GBPJPY Technical Analysis –
4 hour Timeframe

On the 4
hour chart, we can see that we have clear zone where the price is likely to
react to. The support around
the 180.75 level now turned into a resistance and we might see a classic “break
and retest” pattern as we have also the confluence with the
50% Fibonacci retracement level
and the moving averages. This is where the sellers are likely to step in with a
defined risk above the resistance to position for another drop into the 176.32
level. The buyers, on the other hand, will want to see the price breaking
higher to pile in and target the next resistance around the 183.00 handle.

GBPJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price bounced from the low around the 179.60 level and rallied into the key
resistance zone. This is where we either get a rejection and new lows going
forward or a break and a rally into the next resistance around the 183.00
handle.

Upcoming Events

Today on the agenda we have the ADP report and the
ISM Services PMI. Tomorrow, we will see the latest Jobless Claims data, which
continues to show a solid labour market. Finally on Friday, we will see the
Japanese wage data, which is something that the BoJ focuses on particularly and
later in the day the NFP report, which is the only one the Fed will see before
its next rate decision. Strong US data is likely to keep global yields
supported and weigh a bit on the JPY, while weak readings should help the JPY
as the yield differentials would compress. Watch out for the Japanese wage data
on Friday as that might be a market mover.

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