GBP/JPY – Another Push Higher Likely

GBP/JPY – Another Push Higher Likely

GBP/JPY – Another Push Higher Likely

We believe that GBP/JPY will be headed higher this coming week because we are bullish GBP and we are bullish USD/JPY. There’s a tremendous amount of data scheduled for release from the U.K. including for the first time ever – the simultaneous release of the BoE monetary policy decision, MPC minutes and the Quarterly Inflation Report. Forty five minutes later, BoE Governor Carney will hold a press conference similar to the one that ECB President Draghi holds after his meetings. Given recent comments from U.K. policymakers, we believe that the risk will be to the upside for the pound because the central bank is moving closer to raising interest rates. Across the pond, investors love U.S. dollars and as long as Friday’s non-farm payrolls report is decent, it should be enough to lift the greenback. The hawkishness of the Bank of England and the Federal Reserve should take GBP/JPY above 194.

Technically, GBP/JPY is consolidating between 191.70 and 194.40. If it breaks to the upside and we think it will, it should be a clear shot to the June highs. After that, 200 is in focus because not only is it a key psychological level but also the 61.8% Fibonacci retracement of the 2007 to 2011 decline. However if GBP/JPY breaks below 191.70, it could sink down to 190 at which point there is a risk of a double top. With that in mind we don’t think the uptrend will break.

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