GBP/JPY Analysis: a Deceptive Calm


From early January to today, the GBP/JPY rate has risen by approximately 17%, driven by the Bank of Japan's ultra-loose policy of keeping rates below zero.

But since August, the upward trend began to weaken — perhaps faith in the pound was undermined by high inflation (the highest among the G7). This week:
→ data published on Wednesday showed that inflation in the UK has stabilized at 6.7%. In an interview with the Belfast Telegraph published on Friday, Andrew Bailey appeared calm when he said the Bank of England did not expect big changes in the data anyway;
→ retail sales data for September in the UK published on Friday turned out to be worse than expected: actual = -0.9%, expected = -0.3%, a month ago = +0.4%

At the same time, the Bollinger Band width indicator is near record lows for the year, as if someone wants to lull the attention of market participants before an important movement. It is possible that this could happen if the Bank of Japan intervenes to support the weakening yen. And then the balance in which GBP/JPY has been since the summer will be disrupted, and a bearish breakdown of the ascending channel will form on the chart (shown in blue).

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