UK

• The BoE kept interest rates unchanged at the last meeting.
• The central bank is leaning towards
  keeping interest rates “higher for longer”, although it kept a door open for
  further tightening if inflationary pressures were to be more persistent.
• The latest employment report showed a slowdown in wage growth
  and some job losses in September which could point to a softening labour
  market.
• The UK CPI last week slightly beat expectations but given
  the softening in the labour market it’s unlikely to change the BoE’s stance.
• The UK PMIs yesterday showed further contraction in the
  services sector.
• The market doesn’t expect the BoE to
  hike anymore.

Japan

• The BoJ kept everything unchanged as expected at the last meeting.
• The Japanese CPIlast week showed that inflationary pressures
  remain high with the core-core reading hovering at the cycle highs.
• The Unemployment Rate last month
  remained unchanged near cycle lows.
• The Japanese Manufacturing PMI matched the prior reading remaining
  in contraction with the Services PMI falling but holding on in expansion.
• BoJ officials continue to repeat
  that the central bank should keep the current monetary policy.
• The latest Japanese wage data missed expectations again which is
  unlikely to lead to a more hawkish BoJ in the near future.

GBPJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the GBPJPY pair
rallied above the key trendline at the
start of the week, but failed to sustain the breakout and erased all the gains.
Although this could very well be another fakeout, which is a reversal pattern,
there are bullish signs emerging as the price continues to print higher lows
and the moving averages remain
crossed to the upside.

GBPJPY Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we have some
key levels to watch out for as the price action remains rangebound. We can see
that we have the main support around
the 181.14 level and the resistance around the 183.81 level. We have also a
strong mid-level where the price has reacted to multiple times in the past and
could act as kind of a barometer for the sentiment. If the price stays above
the mid-level, the buyers will be more in control, while if it stays below the
level, the sellers will have the upper hand.

GBPJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that from
a risk management perspective, the buyers would be better off waiting for the
price to come back to the support level as they will have a much better risk to
reward setup to target another rally above the trendline. The sellers, on the
other hand, are likely to increase their bearish bets around here as they
target the support and eventually a break lower. If the price breaks above the
mid-level, the short-term bearish setup will be invalidated and the buyers will
target the resistance, ultimately aiming for a breakout.

Upcoming Events

Tomorrow we will see the latest US Jobless Claims data
with the market likely focusing on the Continuing Claims figures as they’ve
missed expectations two times in a row already and might be a signal that the
labour market is weakening. On Friday, we will get the Tokyo CPI and the US PCE
reports which are unlikely to change anything for the near-term policy outlook.
Strong US data is likely to support global yields and weigh on the JPY and vice
versa in case of weak data.

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