GBPJPY: Bears are in Control as Market Counts Down to BOJ Meeting
Another GBPJPY rally fizzled out last week and the bears are looking to stamp their authority on the market. Thursday sees the latest Bank of Japan policy meeting, where traders will get an update on interest rate and monetary policy.
Analysts expect the BOJ will hold rates steady at -0.1% and recent poor results for Japanese inflation will assure that, if we don’t see a surprise cut. The new Japanese Prime Minister may want to be seen as taking action to fight deflation and spur the nation’s recovery.
It is expected that the BOJ will cut its growth and price forecasts for the year after the most recent numbers were set in July, with expectations for -4.7% drop for the current fiscal year. The projections were set before the big economic contraction of April-June, which saw a 28% annualized drop in GDP.
Brexit still clouds the outlook for the pound but optimism is growing after the EU’s chief negotiator Michel Barnier announced that he would stay on in London in order to try and secure a deal. On Friday, Barnier promised to “intensify talks,” adding that both sides share a “huge common responsibility.”
GBPJPY Technical Outlook
GBPJPY has fallen after failing to get above the 50-day moving average and this has the potential to see further losses in the pair. The first support comes in around 135.75, with the 134.00 level being the target. A close above the moving average around the 137.50 level would be a sign the bulls are back in control. The Investing Cube team is currently available to help all levels of traders with the Forex Trading Course or one-to-one coaching.