CFD Trading Rate Great Britain Pound vs Japanese Yen (GBPJPY)

• GBP/JPY holds positive ground near 192.20 after the release of the UK inflation report. 
• UK CPI rose 3.2% YoY in March vs. 3.1% expected. 
• The BoJ’s cautious stance weighs on the Japanese Yen (JPY) against the GBP. 

The GBP/JPY pair snaps the two-day winning streak around 192.20 during the early European session on Wednesday. The Pound Sterling (GBP) edges higher to an intraday high of 192.40 and then retreats following the hotter-than-expected UK Inflation data. 

The headline annual UK Consumer Price Index rose 3.2% in March, softer than a 3.4% increase in February. This reading came in above the market consensus of 3.1%, but still higher than the BoE’s 2.0% target, according to the Office for National Statistics on Wednesday. Furthermore, the core CPI inflation dropped to 4.2% YoY in March from 4.5% in February. Meanwhile, the UK monthly CPI rose 0.6% in March, the same pace seen in February. The GBP gains traction as investors push back market expectations of a September BoE rate cut. 

On the Japanese Yen front, the Bank of Japan (BoJ) has been cautious in normalizing its policy. Japanese CPI inflation is expected to remain above 2% through fiscal year 2024 and decelerate in fiscal year 2025, according to the BoJ’s quarterly outlook report. This triggers the anticipation that interest rates will remain extremely low for some time, which weighs on the Japanese Yen (JPY). Investors will monitor the fresh quarterly growth and price projections due at its April 25–26 policy meeting for any hints about the path of interest rate. 

• GBP/JPY climbs 0.60%, nearing the 192.00 resistance as the Japanese Yen weakens.
• The pair has fluctuated between 190.00 and 193.00 for 17 days, with significant moves restricted by crucial technical points.
• Possible intervention from Japanese authorities may drive GBP/JPY down, aiming for initial support at the Ichimoku Cloud's top at 189.00.

The GBP/JPY edges higher during the North American session, up by 0.60%, as the Japanese Yen (JPY) remains the weakest currency on Monday. At the time of writing, the cross-pair exchanges hands at 191.92, shy of cracking 192.00.

GBP/JPY Price Analysis: Technical outlook

During the latest 17-day span, GBP/JPY price action has remained within the 190.00-193.00 boundaries, unable to break below/above the first key support and resistance levels, keeping the pair range bound.

In the event of Japanese authority's intervention, the GBP/JPY might drop below 190.00, sending the pair tumbling toward the top of the Ichimoku Cloud (Kumo) at 189.00, closely followed by the 100-day moving average (DMA) at 187.29.

On the other hand, buyers reclaiming 193.00 look for a challenge of the year-to-date (YTD) high at 193.54, ahead of 194.00.

GBP/JPY Price Action – Daily Chart

• 'Bearish engulfing' on GBP/JPY suggests growing bearish momentum.
• Break below Tenkan-Sen may lead to more declines, with key supports eyed.
• Resistance at 192.00, recent highs key for reversals; market sentiment watched.

The GBP/JPY retreats late on Wednesday during the North American session and is down 0.27% as the market sentiment shifts sour. Speculation that the Federal Reserve wouldn’t cut rates as expected spurred risk aversion, with traders seeking safety moving to the Japanese Yen, the Greenback, and the Swissie. The cross exchanges hands at 191.82.

GBP/JPY Price Analysis: Technical outlook

The picture shows the formation of a ‘bearish engulfing’ candle pattern, which suggests that bears are gathering momentum. However, to confirm that the GBP/JPY has peaked at around 192.94 as of today, sellers must push prices below the Tenkan-Sen level at 191.49. Once cleared, the next stop would be the Senkou Span A at 191.12, ahead of falling to the Kijun Sen at 190.74.

On the flip side, the GBP/JPY first resistance would be the 192.00 figure, followed by April’s 10 high at 192.95. The next resistance would be the current year-to-date (YTD) high at 193.53.

GBP/JPY Price Action – Daily Chart

• GBP/JPY climbs past 192.00, buoyed by light economic data and upbeat sentiment.
• Resistance at 192.24, 192.50, with eyes on 193.00+.
• Defined support levels mark potential reversal points if retreat occurs.

The GBP/JPY climbed 0.29% late in the North American session after bouncing off daily lows reached earlier at around 191.35. Risk appetite improvement amid a light economic docket sponsored a rally in the cross-pair, which trades at 192.10.

GBP/JPY Price Analysis: Technical outlook

The GBP/JPY daily chart suggests the air is neutral to slightly upwards after buyers reclaimed 192.00. If the pair surpasses the April 4 high of 192.24, look for a test of 192.50. A breach of the latter will open the door to challenging the 193.00 figure. Further upside is seen at 193.53.

 On the other hand, if the cross dives below 192.00, that would expose the Tenkan-Sen level at 191.14. Once surpassed, the next support would be the Senkou Span A at 190.94, ahead of the Kijun-Sen at 190.74. in further weakness, the next stop would be the April 2 low of 190.03.

GBP/JPY Price Action – Daily Chart

• GBP/JPY nears week's highs, showing cautious uptrend despite lower high.
• Support at 190.96, resistance at 192.00 mark pivot points.
• Market eyes technical indicators, global economy for future direction.

The GBP/JPY posted decent gains of 0.17% on Friday amid a risk-on impulse following the release of market-moving economic data from the United States. Nonfarm Payrolls for March exceeded estimates, though they barely benefitted the US Dollar as witnessed by the GBP/USD. At the time of writing, the pair exchanges hands at 191.60 after hitting a low of 190.67.

GBP/JPY Price Analysis: Technical outlook

The pair finished the session near the mid-highs of the week but below the 192.00 figure. With he GBP/JPY achieving a lower high and low, the pair is slightly tilted to the downside, despite standing above the Ichimoku Cloud (Kumo).

Hence, the GBP/JPY first support would be the Senkou Span A at 190.96. A breach of the latter will expose the Kijun-Sen at 190.74, followed b the April 2 low of 190.03. Further downside is seen at the Senkou Span B at 189.38.

On the other hand, the first resistance would be the 192.00 mark. A breach of the latter will expose the 193.00 figure, followed by the year-to-date (YTD) high at 193.54.

GBP/JPY Price Action – Daily Chart

• GBP/JPY fades as UK-Japan interest rates are expected to converge. 
• In the UK, falling inflation is expected to lead to lower interest rates. 
• In Japan rising inflation is increasingly expected to lead to higher interest rates.

GBP/JPY trades a tenth of a percent lower on Friday, at just above 191.000, as converging UK-Japan interest rate expectations reduce the advantage for investors of holding the Pound Sterling (GBP) over the Japanese Yen (JPY), weighing on the exchange rate. 

Easing inflation expectations in the UK have led investors to speculate that the Bank of England (BoE) will cut interest rates in June. This has weakened the Pound Sterling since lower interest rates tend to reduce foreign capital inflows. 

Conversely in Japan, the Bank of Japan increased interest rates from an extraordinarily low, negative 0.1% level, at the bank’s March meeting. The move had many investors speculating as to whether the increase was a one-off or the start of a cycle of rate hikes that could strengthen the Yen over the longer run. 

In a recent interview with the Asahi Shimbun, Bank of Japan (BoJ) Governor Ueda seemed to suggest more interest rate hikes could be down the road given accelerating inflation. 

Ueda said the positive results of the Shunto spring wage negotiations will be reflected in wages through the summer, and then reflected in higher consumer prices later in the year. 

"Given annual wage talks outcome so far, trend inflation is likely to gradually accelerate," said Ueda. 

Survey shows UK inflation cooling 

In the UK meanwhile, the latest Bank of England (BoE) Decision Maker Panel (DMP) survey for February showed that most firms see selling prices and wage inflation cooling over the next year. 

According to the DMP survey, selling price expectations decelerated to 4.1% from 4.3%, the lowest reading in over two years. Wage growth expectations softened to 4.9% on a three-month moving average basis from 5.2% in February. 

Bank of England Governor Andrew Bailey recently said that market expectations for two or three rate cuts this year are “reasonable”, further increasing speculation the BoE will pull the trigger and cut rates in June.

Soft Services PMI data for March, released on Thursday, impacted the economic outlook for the UK, adding to the reasons for the BoE to cut interest rates. 

The UK Services PMI fell to 53.1, missing expectations and the prior reading of 53.4. 

Nevertheless, not all UK data was negative. A recent report by the UK’s largest building society Nationwide showed the first rise in house prices since January 2023, according to the Guardian. 

This comes after BoE lending data showed a surprise rise in Mortgage Approvals rising to their highest level since September 2022 in February. 

• GBP/JPY falls to 191.65, cautious after missing week's high, affected by weak UK services data.
• Further decline risk, with support at Tenkan-Sen, Senkou Span A.
• Japanese intervention concerns limit movement, market awaits new direction signals.

The Pound Sterling lost some ground against the Japanese Yen late in the North American session on Thursday, amid a risk-off impulse, following softer-than-expected UK Services PMI figures. At the time of writing, the GBP/JPY trades at 191.65, losing 0.12%.

GBP/JPY Price Analysis: Technical outlook

After bouncing off two-week lows of 190.03, the GBP/JPY registered back-to-back bullish sessions but failed to extend beyond 192.24, the current week's high. If buyers had reclaimed 192.50, that would’ve sponsored a move to 193.00, but intervention threats by Japanese authorities keep traders cautious.

On the other hand, Thursday’s price action witnessed the pair dipping toward 191.59, which could open the door to extend its losses past the Tenkan-Sen at 191.14. Once surpassed, the GBP/JPY next stop would be the Senkou Span A at 190.94, followed by the Kijun-Sen at 190.74. Further weakness could drive price action to April’s low of 190.03.

GBP/JPY Price Action – Daily Chart

• The daily RSI on the GBP/JPY reveals a strong bullish posture, while the MACD shows a shift towards a more balanced market.
• The hourly chart discloses the RSI regularly exceeding overbought thresholds.

In Wednesday's session, the GBP/JPY is trading at the 191.65 level, showing a 0.57% uptick. The market sentiment for GBP/JPY is majorly bullish, but there is a high likelihood that investors may start taking profits as the cross reached overbought conditions on the hourly chart.

On the daily chart, the Relative Strength Index (RSI) pointing north above 50 indicates that buyers currently have a slight advantage in the market. While there are no extreme levels, suggesting overbought conditions, the RSI reveals a generally strong bullish posture. On the contrary, the Moving Average Convergence Divergence (MACD) is generating decreasing red bars, hinting at the presence of negative momentum and pointing toward more balanced market conditions.

GBP/JPY daily Chart

The hourly chart presents a contrasting perspective with the RSI logging higher values, lying deep in overbought terrain. This tends to predict a downward correction as the upward momentum may be overextended. In addition, the green rising bars of the MACD histogram also demonstrate positive momentum, reinforcing the strong presence of buyers in the market.

GBP/JPY hourly Chart

In terms of the overall trend, the GBP/JPY is positioned above its 20-day, 100-day, and 200-day SMAs. This pattern signals an enduring bullish trend in both short-term and long-term periods. In summary, while both the daily and hourly charts appear mostly bullish, the indicators reveal a stronger upward momentum in the hourly market with the possibility of a downward correction in the short term. However, as the pair holds above the main SMAs, the downward movements could be considered a mere correction.

• The Sterling has trimmed some losses amid Yen weakness and upbeat UK manufacturing data
• Failure to break above 190.75 would keep the bearish structure intact.
• An AB=CD correction might push the pair to 189.70. 

The Sterling is moderately higher on Tuesday, favored by a somewhat weaker Yen, which suffers when US Treasury yields rise and the upbeat UK manufacturing figures. Bulls, however, are likely to be challenged at the 190.75 area.

GBP/JPY Price Analysis: Technical Outlook

The pair has completed a bullish cycle at 193.55 and is going through a corrective reversal with scope for further decline. Bears have been contained so far at the 61.8% Fibonacci retracement of the March rally, but a failure to return above 190.75 would keep the negative structure intact.

An AB=CD correction would push the pair through the 190.11 support area toward the 189.60 level. On the contrary. a confirmation above 190.75 and 1.91.50 would negate this view.

GBP/JPY 4-hour chart

• GBP/JPY revives from 190.00 as UK Manufacturing PMI returns to expansion.
• UK’s soft shop price inflation boosts BoE rate cut expectations.
• The expectations for Japan’s intervention to support the Japanese Yen have deepened.

The GBP/JPY pair discovers buying interest near the crucial support of 190.00. The cross finds support as the S&P Global/CIPS has reported that the United Kingdom Manufacturing PMI has returned to expansion after contracting for more than a year.

The UK Manufacturing PMI landed above the 50.0 threshold, which separates the expansion from contraction, at 50.3. The factory data was higher than expectations and the prior reading of 49.9.

Rob Dobson, Director at S&P Global Market Intelligence, said: “The end of the first quarter saw UK manufacturing recover from its recent doldrums. Production and new orders returned to growth, albeit only hesitantly, following yearlong downturns, with the main thrust of the expansion coming from stronger domestic demand.

The robust recovery in the UK Manufacturing PMI indicates a revival in household spending, fueled by growing expectations that the Bank of England (BoE) will start reducing interest rates sooner due to easing inflation.

In Tuesday’s Asian session, the British Retail Consortium (BRC) showed that shop price inflation grew by 1.3% in March, at the slowest pace in more than two years, due to softening prices of food and non-food items. This has increased expectations for the BoE to unwind its historically tight interest rate stance.

On the Japanese Yen front, uncertainty over the Bank of Japan’s (BoJ) interest rate outlook could push the Japanese Yen on the back foot. The BoJ is expected to adopt a cautious approach to further policy tightening due to the absence of concrete evidence for the wage growth spiral.

Meanwhile, speculation about Japan’s stealth intervention in the FX domain keeps the downside in the Japanese Yen limited. Japan's Finance Minister Shunichi Suzuki reiterated his warning about the recent rapid JPY moves on Monday, saying he would respond appropriately and would not rule out options against excessive volatility.

• GBP/JPY trades with a mild negative bias around 190.30 on Tuesday. 
• The verbal intervention from the Japanese Finance Minister and rising Middle East geopolitical tensions lift the Japanese Yen (JPY).
• BoE’s Bailey signaled markets are right to expect more than one interest rate cut this year. 

The GBP/JPY cross trades in negative territory for the fifth straight day near 190.30 on Tuesday during the early European session. The verbal intervention from the Japanese authorities provides some support to the Japanese Yen (JPY) for the time being. 

Japanese Finance Minister Shunichi Suzuki said on Tuesday that he will not rule out any steps to respond to disorderly moves and that he will monitor foreign exchange (FX) moves with a high sense of urgency. The verbal intervention might lift the JPY in the near term and cap the upside for the GBP/JPY cross. 

Additionally, warplanes attacked a building inside Iran's consulate complex in Damascus, Syria, on Monday. Some of the most senior members of Iran's Revolutionary Guard were killed, marking an escalation in the confrontation that has lasted over half a year. The ongoing geopolitical tensions in the Middle East might further boost safe-haven assets like JPY.

On the other hand, the dovish stance of the Bank of England (BoE) weighs on the Pound Sterling (GBP). The BoE Governor Andrew Bailey signaled markets are right to expect more than one interest rate cut this year, saying he is increasingly confident inflation is heading towards the central bank’s target. Any further dovish comments from the BoE official are likely to exert selling pressure on the GBP and create a headwind for the GBP/JPY pair. 

• GBP/JPY hovers around 191.00, with trading subdued due to the Easter holiday.
• Technical indicators show potential for movement, with key levels at 191.57 and 190.74, marking immediate targets.
• Future direction hinges on breaking 192.00 resistance or 190.00 support.

On Friday, the GBP/JPY remained steady at around 191.00, almost flat, as the financial markets remained closed in observance of the Easter holiday. In the meantime, Fed Chair Jerome Powell crossed the newswires, saying that monetary policy is well placed to react to a range of different data paths.

GBP/JPY Price Analysis: Technical outlook

The daily chart suggests the GBP/JPY is trading sideways, capped on the upside by the Tenkan-Sen at 191.57. Since the pair fell below the latter, the exchange rate has remained beneath the 191.40 area, which has opened the door for further downside.

A push below 191.00 could pave the way for a deeper pullback. The next support would be the Kijun Sen at 190.74, followed by the March 25 wing low of 190.33. A breach of the latter would expose the next support level at 190.00.

On the other hand, if GBP/JPY stays afloat and rallies above the Tenkan-Sen, that would open the door to challenge 192.00. Further gains are seen above that level, with the 193.00 mark, followed by the current year-to-date (YTD) high of 193.53.

GBP/JPY Price Action – Daily Chart

• GBP/JPY hovers around 191.00, reflecting market caution ahead of Japanese unemployment and industrial production updates.
• Wall Street ends Q1 on a mixed note, with UK's recession confirmation and vigilance over JPY's weakness influencing sentiment.
• Technical analysis suggests potential for movement if GBP/JPY breaches key levels, with 192.00 and 193.00 as notable targets.

The GBP/JPY barely moved on Thursday amid thin liquidity conditions and is hovering around 191.00, virtually unchanged as Friday’s Asian session begins.

Wall Street posted a stellar first quarter of 2024, with the S&P 500 and the Dow Jones finishing in the green. The outlier was the Nasdaq Composite, which dropped 0.12% in the last trading day of Q1.

In addition, economic data from the UK showed that Britain’s economy hit a technical recession, as expected by the market consensus. In Japan, authorities remain vigilant about the Japanese Yen's (JPY) weakness, which sent the USD/JPY rallying near 152.00.

As the Asian session begins, the Japanese economic docket will reveal the unemployment rate for February, which is expected to remain at 2.4%. At the same time, Industrial Production figures for the same month are expected to rise from -6.7% MoM to 1.4%, while Retail Sales are foreseen to expand by 3%.

GBP/JPY Price Analysis: Technical outlook

The GBP/JPY is subdued as liquidity conditions tumble. If buyers regain control, they must push prices above the Tenkan-Sen level at 191.57, which could open the door to challenge 192.00. Further upside is seen at 193.00, followed by the year-to-date (YTD) high at 193.53

On the flip side, if the pair drops below 191.00, that would pave the way for further losses. The next support would be the Kijuin-Sen at 190.74, followed by the 190.00 mark.

GBP/JPY Price Action – Daily Chart

• GBP/JPY edges lower to 191.00 following the UK GDP Q4 data on Thursday. 
• The UK GDP numbers contracted 0.3% QoQ and 0.2% YoY in Q4, as expected. 
• The speculation that the Bank of Japan (BoJ) will intervene in the FX market might lift the Japanese Yen against the Euro. 
• Investors will closely watch the Tokyo Consumer Price Index (CPI) for March, due on Friday. 

The GBP/JPY cross trades in negative territory for two straight days, hovering around the 191.00 mark on Thursday. The dovish remarks from the Bank of England (BoE) exert some selling pressure on the Pound Sterling (GBP). 

The latest data from the Office for National Statistics showed on Thursday that the UK Gross Domestic Product (GDP) for the fourth quarter (GDP) contracted 0.3% QoQ and 0.2% YoY in Q4. Both figures were in line with market expectations. The GBP remains weak following the UK GDP numbers as the markets raise their bet that the Bank of England (BoE) will begin three quarter-point reductions in rates this year. The BoE Governor Andrew Bailey said that interest rate cuts will be ‘in play’ at future BoE policy meetings.

On the other hand, the weakening of the Japanese Yen might be limited amid speculation that the Bank of Japan (BoJ) will intervene in the FX market to stop disorderly and speculative moves in the currency. Japan’s Chief Cabinet Secretary Yishimasa Hayashi stated on Thursday that he will closely watch the FX volatility and won’t rule out any steps against excessive moves. 

Moving on, market participants will keep an eye on the Tokyo Consumer Price Index (CPI) for March, Unemployment Rate, Industrial Production, and Retail Trade, due on Friday. If the Japanese CPI data shows softer-than-estimated, this could complicate the BoJ's interest rate hike path and weigh on the JPY. The UK market will be closed on the occasion of Good Friday. 

• GBP/JPY edges lower to 191.30 in Wednesday’s early European session. 
• Japanese Finance Minister came with some verbal intervention, which lift the Japanese Yen.
• The dovish stance from the BoJ might exert some pressure on the JPY. 
• Investors await the UK Q4 GDP growth numbers and Japan’s Tokyo Consumer Price Index (CPI), due later this week. 

The GBP/JPY cross trades on a weaker note near 191.30 during the early European session on Wednesday, snapping the two-day winning streak. The Japanese Yen (JPY) recovers some lost ground against its rivals after the verbal intervention from Japanese authorities early Wednesday. Nonetheless, the dovish remarks from the Bank of Japan (BoJ) policymaker to maintain accommodative monetary conditions might limit the JPY and cap the downside of the GBP/JPY cross in the near term.

Japanese Finance Minister Shunichi Suzuki stated on Wednesday that he will not rule out any actions including "decisive steps" to respond to any excessive moves in the foreign exchange. This, in turn, boost the JPY against the Pound Sterling (GBP) on Wednesday. Furthermore, the cautious mood in the market or uncertainties ahead of the Good Friday holiday might boost safe-haven flows and benefit the JPY for the time being.

On the other hand, the recent dovish comments from the BoJ policymaker to maintain accommodative monetary conditions might limit the JPY and cap the downside of the GBP/JPY cross. The BoJ governor Kazuo Ueda said on Wednesday that “based on our current economic and price projections, accommodative financial conditions are expected to continue for the time being.” 

On the GBP’s front, the Bank of England's (BoE) Catherine Mann, one of the BOE's most hawkish policymakers, said investors expect too many interest rate cuts this year. Money markets raise their bets on easing at its next monetary-policy decision, putting the chance of a rate cut at 20%.  

Traders will take more cues from UK GDP growth numbers on Thursday, which are projected to contract 0.3% QoQ in the fourth quarter. In the scenario of stronger-than-expected GDP growth numbers, the Pound Sterling (GBP) could gain momentum and act as a tailwind for the GBP/JPY pair. On Friday, the Tokyo Consumer Price Index (CPI) for March will be the highlight. 

• GBP/JPY finds support at the upper borderline of a Wedge it recently broke out from. 
• Bearish technical indicators suggest more downside is possible after the overextension. 

GBP/JPY has been rising in a bearish Wedge pattern. Recently the pair broke above the upper boundary line and then reversed lower. It has since found temporary support at the Wedge’s upper edge. A cursory glance at the tea leaves suggest a risk of further weakness despite the uptrend remaining intact. 

GBP/JPY formed a Two Bar reversal pattern on the daily chart (rectangled) at the March 20 and 21 highs. Such patterns are fairly reliable indicators of short-to-medium term reversals. 

Pound Sterling versus Japanese Yen: Daily chart

At the same time as price rolled over, the Relative Strength Index (RSI) exited its overbought zone, giving a sell signal (circled). 

In addition, when prices reach bullish extremes and overshoot trendlines the reversal that follows is often significant, suggesting GBP/JPY could be reversing a longer-term trend. 

A break below the last swing low of the up move, the 187.964 March 11 low, would provide stronger confirmation that the trend was turning bearish. 

Such a break would probably be followed by a move down inside the Wedge to a target at the lower boundary of the pattern, at roughly 180.400. 

Along the way fairly stubborn support is likely to be provided by the 100-day and 200-day SMAs at 186.610 and 184.730 respectively. 

A decisive break below the lower borderline of the Wedge would be very bearish and likely see a much deeper slide to the 170.000s, based on an extrapolation of the height of the wedge lower.  

A break above the 193.50 highs, however, would provide confirmation the dominant bull trend was still intact and continuing higher. 

Although it looks overstretched, such a move could meet an next upside target at the 195.88 highs of 2015. 

• GBP/JPY retreats to 190.69, down 0.61%, missing the 194.00 psychological level.
• Uptrend signaled, with 190.75 support possibly curbing losses.
• Overcoming 191.00 resistance key to approach near 193.00 highs.

The GBP/JPY retreats deeper below the 190.00 figure after hitting a 9-year high of 193.55, as buyers fail to push through the latter and aim toward the 194.00 mark. At the time of writing, the pair traded at 190.69, down 0.61%.

GBP/JPY Price Analysis: Technical outlook

Despite falling, the GBP/JPY remains upward biased despite posting losses. The confluence of the Tenkan and Kijun-Sen at 190.75 capped the pair’s slide, but downside risks remain. If sellers push the exchange rate below the latter, the pair could aim for 190.00. Further losses are seen below that level, as the 189.00 psychological figure would be up next.

However, the path of least resistance is upwards, and if they reclaim the 191.00 figure, look for further gains. The next resistance would be today’s high at 192.23, followed by the 193.00 mark.

GBP/JPY Price Action – Daily Chart

• GBP/JPY pulls back from extremes after the recent bout of Yen weakness. 
• The Pound Sterling weakens after the BoE distribution of voting shows no-one voted for a hike. 
• Japanese PMI data shows steady progress higher, UK data is mixed. 

GBP/JPY is down over half a percent on Thursday, trading in the 192.000s, after a combination of the results of the Bank of England (BoE) policy meeting and weaker-than-expected UK PMI data, weighed on the Pound Sterling (GBP). 

An improvement in Japanese data, meanwhile, may have helped staunch the recent hemorrhaging experienced by the Yen (JPY). The Jibun Bank Manufacturing Purchasing Manager Indices (PMI) showed upticks in both Manufacturing and Services sectors in March. 

From a technical perspective, GBP/JPY looks overstretched after breaking out of the top of a Rising Wedge pattern on overbought momentum, according to the Relative Strength Index (RSI). A negative close on Thursday could signal an exit from overbought RSI, providing traders with a sell signal. 

Pound Sterling to Japanese Yen: Daily chart 

BoE voting distribution shows dovish shift

The Bank of England left interest rates unchanged at 5.25% at its meeting on Thursday, as was widely expected. The distribution of votes, however, changed from the previous meeting with zero officials voting for a hike instead of the one before. The majority of eight board members voted for no-change – one more than the seven of the previous meeting – and only one voted for a cut in interest rates, as before. 

The Pound Sterling was hit by the lack of any BoE officials voting to raise interest rates, since higher interest rates are a positive factor for currencies because they attract greater inflows of foreign capital. 

In Japan the opposite happened after the Bank of Japan (BoJ) raised interest rates, at its March meeting. Strangely the move failed to support the Yen. Reasons given were that it was widely telegraphed prior to the meeting, and that at between 0.0% and 0.1% interest rates in Japan are still very low compared to other major economies and unlikely to rise much in the future. This suggests the Yen will continue to be used as a funding currency – borrowed to purchase higher yielding peers. 

Purchasing Manager Indices show mixed results 

The UK S&P Global/CIPS Composite PMI in March came out lower-than-expected at 52.9 when 53.1 had been forecast, from 53.0 previously, on Thursday. The data weighed on GBP. 

UK Services PMI undershot expectations of remaining at 53.8, dropping to 53.4. 

Manufacturing was the bright spot, actually rising to 49.9 when 47.8 had been forecast from 47.5 previous. 

In Japan the Jibun Bank Manufacturing PMI rose to 48.2 in March from 47.2 previously and Services PMI rose to 54.9 from 52.9. 

Technical Analysis: Upside break seems unsustainable 

GBP/JPY sees an upside break above the wedge pattern’s highs but the move looks unsustainable and price is already reversing. A bearish close on Thursday would form a Two Bar reversal pattern on the daily chart – a fairly reliable indicator of more weakness to come.

The RSI will probably exit overbought, another bearish sign. A break back inside the Wedge, confirmed by a decisive move below the upper trendline currently at 191.50, would probably signal further downside. 

Pound Sterling to Japanese Yen: Daily chart

Often a reversal from an overshooting extreme, as is the case with GBP/JPY is a reliable signal to sell. When prices reach bullish extremes and overshoot their trendlines they often reverse sharply and move down quickly. 

• GBP/JPY holds positive ground near 192.80 after the downbeat UK February inflation data. 
• The UK CPI rose 3.4% YoY in February vs. 3.6% estimated. 
• The dovish hike from the BoJ weighs on the JPY against the GBP. 
• The BoE interest rate decision on Thursday will be a closely watched events 

The GBP/JPY cross remains firm below the 193.00 barrier during the early European trading hours on Wednesday. The downbeat UK Consumer Price Index (CPI) inflation data for February did not impact the Pound Sterling (GBP) against the Japanese Yen (JPY). Investors will closely monitor the Bank of England's (BoE) monetary policy meeting on Thursday for fresh catalysts, with no change in rate expected. At the press time, GBP/JPY is trading at 192.80, gaining 0.47% on the day. 

The latest data from the UK Office for National Statistics on Wednesday reported that the nation’s Consumer Price Index (CPI) for February rose 0.6% MoM from a 0.6% fall in the previous month, below the market consensus of a 0.7% increase. On an annual basis, the CPI figure increased 3.4% YoY, easing from a 4.0% rise in January and worse than the market expectation of a 3.6% increase. 

This report will influence the BoE on whether the central bank will signal its first interest rate cut or retain its “higher rate for longer” stance. Meanwhile, the BoE is anticipated to keep interest rates unchanged at 5.25% for the fifth successive meeting on Thursday as inflation is cooling down. 

The BoE governor Andrew Bailey said after the February meeting that the UK central bank saw good news on inflation over the past few months, but policymakers need to see more evidence that inflation is on the course to the 2 % target before BoE can lower interest rates.

On Tuesday, the Bank of Japan (BoJ) decided to raise the interest rate by 10 basis points (bps) from -0.1% to 0% for the first time since 2007, as widely anticipated. However, the Japanese policymakers did not provide any guidance about future policy trajectory and stated that financial conditions would remain accommodative for the time being. The uncertainty of the pace of the BoJ's policy normalization exerts some selling pressure on the JPY and acts as a tailwind for the GBP/JPY cross. 

Looking ahead, the Japanese Merchandise Trade Balance Total for February and Jibun Bank Manufacturing PMI for March will be due on Thursday. Market players will shift their attention to the BoE interest rate decision later on Thursday. These events could give a clear direction to the GBP/JPY cross.