The British Pound extended upward movement against the Japanese yen on Wednesday, taking the price to more than 184.00. The yen was recovering losses since last couple of days, leading to consolidation of GBP/JPY between 181.10 and 184.30. The yesterday’s dissolution of Japanese government however again spurred huge selling pressure in the Japanese Yen.
Technical Analysis
As of this writing, the pair is being traded around 184.39. On the upside, the pair may test the resistance around 184.65, the trend line resistance and high of 2014, as demonstrated in the following daily chart.
A break and daily closing above 185.39 will spur a renewed buying interest, validating a move towards the 186.00 handle. Likewise, a break and daily closing below 185.39 will spur selling pressure in the price of GBP/JPY during the next couple of days.
On the downside, there is a critical support around 181.15, the level which acted as support on many occasions during the past couple of days. The next support lies around 173.34, the 200-day SMA.
The overall bias is bullish because of higher lows on the daily chart. The bias is expected to remain bullish as far as the 181.00 support area remains intact.
BOE Monetary Policy Decision
The monetary policy committee of the Bank of England (BoE) decided to keep the interest rate unchanged in November. 7 out of 9 MPC members voted to retain the current interest rate while only 2 members voted otherwise. The BOE meeting minutes are also released today. The less dovish sentiment of the report supported the pound against the peer currencies.
BOJ Monetary Policy Decision
Japan kept the interest rate unchanged at 0.1% in line with expectations for this November. The dovish sentiment of the monetary policy report supported buying pressure in the price of GBP/JPY.
Trade Idea
Considering the overall technical and fundamental outlook, buying or selling the pair on a breakout through the triangle could be a good strategy in short to medium term.
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