The GBPJPY pair at a price of 178.196 has seen a considerable improvement after reaching its lowest point since mid-June.

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• GBP/JPY stages a goodish recovery from the vicinity of its lowest level since mid-June.

The pair currently trades last at 178.196.

The previous day high was 181.93 while the previous day low was 177.41. The daily 38.2% Fib levels comes at 179.14, expected to provide resistance. Similarly, the daily 61.8% fib level is at 180.2, expected to provide resistance.

The GBP/JPY cross attracts some buying near the 177.50 area during the Asian session on Friday and stages a modest bounce from its lowest level since mid-May touched the previous day. Spot prices climb to a fresh daily peak in the last hour, albeit lack any follow-through beyond mid-178.00s as traders keenly await the outcome of the highly-anticipated two-day Bank of Japan (BoJ) policy meeting.

Some repositioning trade ahead of the key central bank event risk turns out to be a key factor behind the GBP/JPY pair’s intraday recovery of around 100 pips. The upside, however, remains capped in the wake of speculations that the BoJ might tweak its Yield Curve Control (YCC) policy. The bets were reaffirmed by stronger Tokyo CPI figures, which unexpectedly rose in July, and remain well above the BoJ’s 2% target range. This, in turn, pushes the yield on the 10-year Japanese Government Bond (JGB) above the BoJ’s tolerance band, which, along with a softer risk tone, underpins the safe-haven Japanese Yen (JPY) and acts as a headwind for the cross.

Apart from this, diminishing odds for more aggressive rate hikes by the Bank of England (BoE), bolstered by softer UK consumer inflation figures last week, contributes to capping the upside for the GBP/JPY cross. That said, BoJ Governor Kazuo Ueda reiterated that the central bank will stick to its accommodative monetary stance and added that the long-term yield rate remains stable under the YCC policy. Moreover, a government spokesperson noted earlier this week that Japan’s inflation will likely slow to around 1.5% next year when stripping away the effect of one-off factors. This, in turn, is holding back traders from placing aggressive directional bets.

Technical Levels: Supports and Resistances

GBPJPY currently trading at 178.26 at the time of writing. Pair opened at 178.44 and is trading with a change of -0.1 % .

The pair is trading below its 20 Daily moving average @ 181.77, below its 50 Daily moving average @ 178.79 , above its 100 Daily moving average @ 172.38 and above its 200 Daily moving average @ 167.86

The previous day high was 181.93 while the previous day low was 177.41. The daily 38.2% Fib levels comes at 179.14, expected to provide resistance. Similarly, the daily 61.8% fib level is at 180.2, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 176.59, 174.74, 172.07
• Pivot resistance is noted at 181.1, 183.77, 185.62

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