GBP/JPY continues grind higher to hit near two-week highs, remains support above 155.00 as BoE policy announcement eyed

• GBP/JPY continued to advance on Wednesday as risk appetite improved the BoE’s policy decision day eve, remaining supported above 155.00.
• GBP/JPY has been trending higher, alongside equities, as of late within the confines of a bullish trend channel.

GBP/JPY continued to trend higher on Wednesday, gaining 0.2% on the day to hit fresh near-two-week highs whilst remaining well supported above the 155.00 level as global risk appetite continued to improve. The pair has been trending higher over the last week or so within the confines of a bullish trend channel, and has now rallied more than 1.5% from sub-153.00 January lows, in fitting with the recent recovery seen in global equity markets. The more risk-sensitive sterling tends to perform better versus the safe-haven yen in times when global equities are advancing.

Ahead of Thursday’s BoE meeting, where the bank is expected to hike interest rates by 25bps to 0.5% and outline quantitative tightening plans, GBP/JPY has been unable to push beyond resistance in the 155.40 area from mid-January. Should there be either a hawkish BoE surprise or a continued improvement in risk appetite, or both, on Thursday, the pair may well break above this level and have a run at the next resistance area at 157.00. Ahead of Thursday’s BoE meeting, however, trading conditions are likely to remain subdued as traders keep their powder dry and remain in wait-and-see mode.