The GBPJPY at 180.815 indicates a state of pre-BoE consolidation during sluggish market conditions.

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• GBP/JPY portrays pre-BoE consolidation amid sluggish markets.

The pair currently trades last at 180.815.

The previous day high was 181.61 while the previous day low was 179.92. The daily 38.2% Fib levels comes at 180.97, expected to provide resistance. Similarly, the daily 61.8% fib level is at 180.57, expected to provide support.

GBP/JPY remains pressured around 180.90 as it prints mild losses while bracing for the first weekly loss in six heading into Thursday’s London open. In doing so, the cross-currency pair prepares for the Bank of England (BoE) Interest Rate Decision.

While the BoE is expected to announce a 0.25% rate hike and the latest UK inflation clues have been hawkish, the GBP/JPY pair’s recent losses could be linked to the pre-BoE positioning.

That said, the previous day’s strong UK inflation data also underpins the bullish bias about the cross-currency pair. On Wednesday, UK Consumer Price Index (CPI) for May rose past 8.4% market expectations to reprint the 8.7% YoY figure. That said, the Core CPI, which excludes volatile food and energy items, also crossed the analysts’ estimations and previous readings of 6.8% YoY to register a 7.1% YoY increase in inflation numbers for the said month.

Apart from that, the dovish comments from the Bank of Japan (BoJ) commentary and upbeat yields also restrict GBP/JPY downside.

On Thursday, BoJ board member Asahi Noguchi said the central bank must maintain an ultra-loose monetary policy to ensure wages, seen as key to driving inflation to its 2% target, continue to increase as a trend, reported Reuters. On Wednesday, Japanese Prime Minister Fumio Kishida advocated higher wages while also saying, “Positive moves are appearing in Japan’s economy.”

On the same line, BoJ Governor Kazuo Ueda said the previous day that the BoJ will patiently maintain an easy monetary policy to stably and sustainably achieve the 2% price target accompanied by wage growth.

Hence, the policymakers’ defense of the ultra-easy monetary policy to bolster wages exerts downside pressure on the Japanese Yen (JPY), especially when the US Treasury bond yields grind higher.

Against this backdrop, the S&P500 Futures mildly offered for the fourth consecutive day near 4,405 whereas the US benchmark 10-year Treasury bond yields stabilize recently advanced to 3.74% while the two-year counterpart also rise to 4.74% at the latest.

Looking forward, BoE Interest Rate Decision will be key to watch for near-term directions. Apart from that, the multiple central bank announcements, ex-BoE, and the market’s reaction to the previous day’s hawkish rhetoric comments from Fed’s Powell will be eyed for clear directions.

Although the overbought RSI (14) line challenges the GBP/JPY buyers, the 5-DMA support of near the 180.00 threshold restricts the short-term downside of the cross-currency pair. That said, the bears remain off the table unless witnessing a clear downside break of the previous resistance line stretched from April 2022, close to 176.50 at the latest.

Technical Levels: Supports and Resistances

GBPJPY currently trading at 180.99 at the time of writing. Pair opened at 181.19 and is trading with a change of -0.11% % .

The pair remains strongly bullish on the daily timeframe. It trades above its 20 SMA @ 175.97, 50 SMA 171.93, 100 SMA @ 167.03 and 200 SMA @ 165.35.

The previous day high was 181.61 while the previous day low was 179.92. The daily 38.2% Fib levels comes at 180.97, expected to provide resistance. Similarly, the daily 61.8% fib level is at 180.57, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 180.21, 179.22, 178.52
• Pivot resistance is noted at 181.89, 182.6, 183.58

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