GBP/JPY Price Analysis: Retreats from 166 after BOJ’s inaction but bulls remain hopeful

• GBP/JPY eases inside fortnight-old bullish channel after BOJ.
• BOJ announced no policy change, as expected, but cited inflation fears in quarterly outlook report.
• RSI conditions, 166.20-25 area challenge buyers, 200-HMA tests bears.

GBP/JPY eases from an intraday high surrounding 166.00, to 165.67 by the press time, as the Bank of Japan (BOJ) managed to impress yen buyers without altering the current monetary policy during early Thursday.

That said, the Bank of Japan (BOJ) matched market expectations by announcing no change in the current monetary policy. In doing so, the Japanese central bank kept the benchmark rate unchanged at -0.10% while keeping the target rate for the Japanese Government Bonds (JGBs) at 0.0%. The reason for the GBP/JPY weakness could be linked to the hopes of the BOJ’s next move to be hawkish as the quarterly prints of the BOJ outlook report do cite the inflation fears and weighs on the yen.

Also read: BOJ Outlook Report: Risks to price outlook skewed to upside for time being, roughly balanced thereafter

Technically, the GBP/JPY pair remains on the buyer’s radar as it stays inside a two-week-long bullish channel formation.

However, the recent pullback in the RSI, as well as the pair’s failures to cross the 166.20-25 hurdle, tease short-term sellers.

That said, the 200-HMA and the stated channel’s support line restrict the immediate downside of the GBP/JPY pair, respectively around 164.30 and 164.20.

In a case where the quote drops below 164.20, it can slump towards the monthly low around 160.40 before challenging the 160.00 threshold.

Alternatively, recovery remains elusive until the quote crosses the 166.20-.25 resistance area.

Following that, the aforementioned channel’s resistance line near 166.80 could test the bulls before highlighting the 170.00 psychological magnet for the bulls.

GBP/JPY: Hourly chart

Trend: Further upside expected