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Cable completely reversed course today on a much more hawkish than expected BOE rate decision which included a single vote for a rate hike. Despite some clear slowdown in UK economic growth monetary policy officials are clearly eager to move back to normalization and that helped to put bid underneath sterling for the whole day.
Meanwhile, USD/JPY drifted lower today but appeared to have found a bottom the 113.00 figure leaving GBPJPY in a consolidative position. Although GBP/JPY has been in highly compressed low volatility zone for more than a month, there is a discernable upward pattern to the pair as evidenced by the slightly rising RSI slope. A break above the 141.00 level could signal a major move up.
Part of the reticence in USD/JPY has been due to relatively muted consumer confidence readings, so tomorrow’s U of M data looms large and if it beats, could provide the fuel for a move up in the pair.