#GBPJPY @ 161.577 rallies as central banks tackle liquidity crisis with coordinated efforts. (Pivot Orderbook analysis)

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• GBP/JPY rallies as central banks tackle liquidity crisis with coordinated efforts.
• Swap lines reintroduced: Major central banks unite to address global liquidity concerns.
• Eyes on Bank of England, 25 bps one and done?

The pair currently trades last at 161.577.

The previous day high was 162.19 while the previous day low was 160.12. The daily 38.2% Fib levels comes at 160.91, expected to provide support. Similarly, the daily 61.8% fib level is at 161.4, expected to provide support.

GBP/JPY marched higher in early Asian hours on Monday as the Japanese Yen demand faded on the back of growing optimism on the liquidity front. The risk sentiment got a boost on Monday due to a globalized effort to tame last week’s liquidity crisis.

To reestablish confidence in the financial system, some major central banks, including the Bank of Japan (BoJ) and Bank of England (BoE), have made a coordinated effort to dilute the banking ecosystem across the globe with US Dollars. The swap line has been introduced for this purpose.

The main resource for this swap line is the Federal Reserve (Fed), which the Fed will lend US Dollars to other central banks in exchange for local currency as a short-term loan. The swap line will begin from Monday until April.

On Sunday, the Bank of England said it welcomed the actions by the Swiss authorities to merge Credit Suisse with UBS Group and also emphasized that the UK banking system is well-capitalized and funded. The BoE rate decision is on Thursday, and it will be important to see their forward guidance. This may be the last rate hike from the BoE amid the ongoing liquidity crisis.

The Bank of Japan’s March meeting Summary of Opinions released earlier highlights nothing new, as the bank has remained on an ultra-easing monetary stance for decades. Adding to this, Japanese Finance Minister Shunichi Suzuki said on Monday he was closely watching market moves after a weekend rescue deal for Credit Suisse Group

It is also important to watch how this week unfolds on the liquidity front, citing some earlier reports stating that two European banks are under scrutiny. Therefore, the upside gains in GBP/JPY are likely to remain vulnerable.

Technical Levels: Supports and Resistances

GBPJPY currently trading at 161.7 at the time of writing. Pair opened at 160.51 and is trading with a change of 0.74 % .

The pair is trading below its 20 Daily moving average @ 162.62, above its 50 Daily moving average @ 160.88 , below its 100 Daily moving average @ 162.89 and below its 200 Daily moving average @ 163.31

The previous day high was 162.19 while the previous day low was 160.12. The daily 38.2% Fib levels comes at 160.91, expected to provide support. Similarly, the daily 61.8% fib level is at 161.4, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 159.69, 158.87, 157.62
• Pivot resistance is noted at 161.76, 163.01, 163.83

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