It is anticipated that GBPJPY at a rate of 180.806 will experience further declines due to the increasing disparity between the policies of the Bank of England (BoE) and the Bank of Japan (BoJ).

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• GBP/JPY is expected to deliver more weakness as BoE-BoJ policy divergence widens.

The pair currently trades last at 180.806.

The previous day high was 183.16 while the previous day low was 181.76. The daily 38.2% Fib levels comes at 182.29, expected to provide resistance. Similarly, the daily 61.8% fib level is at 182.62, expected to provide resistance.

The GBP/JPY pair bounces back after a vertical sell-off to near 180.50 in the European session. The cross discovers strength as the Bank of England (BoE) raises interest rates by 25 basis points (bps) to 5.25% to build more pressure on stubborn inflation.

Out of the nine-member led Monetary Policy Committee (MPC), BoE policymaker Swati Dhingra voted for a steady interest rate decision. BoE Governor Andrew Bailey conveyed that the bank rate will stay “sufficiently restrictive for sufficiently long” to return to the inflation target.

An interest rate hike by the United Kingdom’s central bank has widened the BoE-Bank of Japan (BoJ) policy divergence. Last week, the BoJ allowed more flexibility to the Yield Curve Control (YCC) that would soft bond-buying operations.

GBP/JPY delivers a breakdown of the consolidation formed in a range of 181.75-182.70 on an hourly scale. A breakdown of the consolidation results in wider ticks and heavy volume. A declining 20-period Exponential Moving Average (EMA) indicates that the short-term trend is bearish.

The Relative Strength Index (RSI) (14) shifts into the bearish range of 20.00-40.00, which indicates that the downside momentum is active.

Pound Sterling exposes to more downside if the cross drops below the immediate support of 180.50. A decisive breakdown would drag the asset towards July 13 low at 179.50, followed by July 27 low at 177.40.

On the flip side, a recovery move above July 31 high at 183.20 would drive the asset toward July 05 high at 184.00. Breach of the latter would drive the asset into unchartered territory.

Technical Levels: Supports and Resistances

GBPJPY currently trading at 180.77 at the time of writing. Pair opened at 182.19 and is trading with a change of -0.78 % .

The pair is trading below its 20 Daily moving average @ 181.52, above its 50 Daily moving average @ 179.61 , above its 100 Daily moving average @ 173.19 and above its 200 Daily moving average @ 168.13

The previous day high was 183.16 while the previous day low was 181.76. The daily 38.2% Fib levels comes at 182.29, expected to provide resistance. Similarly, the daily 61.8% fib level is at 182.62, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 181.58, 180.97, 180.18
• Pivot resistance is noted at 182.98, 183.77, 184.38

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