GBP/JPY slides below 169.00, fresh weekly low despite hawkish remarks by BoE’s Bailey

• GBP/JPY fades the post-BoE spike and drops to a fresh weekly low on Thursday.
• The GBP bulls seem unimpressed by the BoE’s 25 bps lift-off and hawkish stance.
• A weaker risk tone underpins the JPY and contributes to the modest intraday fall.

The GBP/JPY cross fades a mild-European session bullish spike to the 169.75 area and drops back closer to the weekly low after the Bank of England (BoE) announced its monetary policy decision. The cross trades in the negative territory for the second successive day on Thursday, with bears now looking to extend the downfall further below the 169.00 round-figure mark.

The British Pound did get a minor lift in reaction to the BoE's hawkish outlook, indicating that persistently high inflationary pressures would require further tightening. This, along with the widely expected 25 bps lift-off, provides a modest lift to the GBP/JPY cross, though the uptick lacks bullish conviction and runs out of steam rather quickly in the absence of any major surprise.

BoE Governor Andrew Bailey, meanwhile, reiterated that inflation remains too high and that the central bank need to stay on course. Bailey added that we have good reasons to expect inflation to fall sharply from April, while the outlook for growth and unemployment has improved. Bailey further noted that economic activity has been stronger than expected recently.

This, however, does little to influence the Sterling Pound or any meaningful impetus to the GBP/JPY cross.Meanwhile, the cautious market mood benefits the safe-haven Japanese Yen (JPY) and acts as a tailwind for the GBP/JPY cross. That said, the Bank of Japan's (BoJ) dovish stance could undermine the JPY and limit the downside for spot prices, warranting caution for bearish traders.

Technical levels to watch