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GBPJPY staged a major reversal today falling more than 150 points in the wake of weaker than expected US ISM Non-Manufacturing report and unexpectedly dovish BoE. UK central bank gave no signs that it intends to hike rates anytime soon, in fact suggesting that it will not tighten policy until 2018 at the earliest. This surprised the market especially in light of all the hawkish rhetoric pre-meeting. The final MPC vote was 6-2 against and that means that cable is likely to have run out of catalysts to rally further.
Meanwhile, the drop in the employment component of the ISM suggests that tomorrow’s NFP data could be soft or at very least that wage growth will be tepid. That, in turn, could put more pressure on USDJPY and send the pair below the 110.00 figure for good.
All of this combines for a very bearish outlook on GBPJPY which has now set a series of lower highs and if the pair breaks the 144.00 barrier it could quickly head to 142.00