GBP/JPY flat-lines above 168.00 mark, reacts little to BoE's 50 bps rate hike decision

• GBP/JPY hits a fresh daily low after the BoE announced its decision, though lacks follow-through.
• The 7-2 MPC vote distribution in favour of the rate hike undermines the GBP and exerts pressure.
• A solid USD recovery weighs on the JPY and helps limit any meaningful downside for the cross.
• The risk-off impulse could benefit the safe-haven JPY and cap any meaningful gains for the cross.

The GBP/JPY cross edges lower during the mid-European session and refreshes daily low after the Bank of England announced its policy decision. Spot prices, however, recover a few pips in the last hour and now seem to have stabilized in neutral territory, just above the 168.00 mark.

The UK central bank delivered a widely anticipated 50 bps rate hike at the conclusion of its December policy meeting. The British Pound, however, edges lower in reaction to a three-way MPC vote split, showing that two members voted to keep rates unchanged and one member voted to raise rates by 75 bps. The downside for the GBP/JPY cross, however, remains cushioned in the absence of any major surprises from the BoE.

The Japanese Yen, on the other hand, is weighed down by a solid US Dollar recovery from a six-month low touched earlier this Thursday. This is seen as another factor lending some support to the GBP/JPY cross. That said, the risk-off impulse - as depicted by a sharp intraday slide in the equity markets - seems to benefit the JPY's relatively safe-haven status and should keep a lid on any meaningful upside for the cross.

Furthermore, a bleak outlook for the UK economy might hold back traders from placing aggressive bullish bets around the Sterling Pound. The aforementioned fundamental factors make it prudent to wait for a strong follow-through buying before positioning for any further appreciating move for the GBP/JPY cross.

Technical levels to watch