UK:
- The BoE kept interest rates unchanged at the last meeting.
- The central bank is leaning more
towards keeping interest rates “higher for longer”, although it kept a door
open for further tightening if inflationary pressures were to be more
persistent. - The latest employment report showed a slowdown in wage growth
and some job losses in September which could point to a softening labour
market. - The UK CPI today slightly beat expectations but given the
softening in the labour market it’s unlikely to change the BoE’s stance. - The latest UK PMIs showed further contraction, especially in the
Services sector. - The market doesn’t expect the BoE to
hike anymore.
Japan:
- The BoJ kept everything unchanged as expected at the last meeting.
- The Japanese CPI showed that inflationary pressures
remain high with the core-core reading hovering at the cycle highs. - The Unemployment Rate missed expectations although it
remains near cycle lows. - The Japanese Manufacturing PMI fell further into contraction but
the Services PMI remains in expansion. - BoJ governor Ueda repeated that they will not
hesitate to take additional easing measures if needed. - The Tokyo CPI, which is seen as a leading
indicator for national CPI, continues to fall although it remains above the BoJ
target. - The latest Japanese wage data missed expectations again which is
unlikely to lead to a more hawkish BoJ in the near future.
GBPJPY Technical Analysis –
Daily Timeframe
GBPJPY Daily
On the daily chart, we can see that the GBPJPY pair
got rejected from the downward trendline where we
had also the confluence with the
61.8% Fibonacci retracement level.
The pair bounced back this week and it’s now approaching the trendline again.
What happens around the trendline will likely decide the next direction for the
pair.
GBPJPY Technical Analysis –
4 hour Timeframe
GBPJPY 4 hour
On the 4 hour chart, we can see that we have a
strong resistance around
the 183.00 level where we got multiple rejections except the fakeout into the
trendline. We can expect the sellers to lean on this resistance with a defined
risk above it to position for a drop into the 176.30 level. The buyers, on the
other hand, will want to see the price breaking higher to pile in and start
targeting the highs.
GBPJPY Technical Analysis –
1 hour Timeframe
GBPJPY 1 hour
On the 1 hour chart, we can see that the
beat in the UK CPI data gave the pair some strength to push into the
resistance. If the sellers succeed and the price starts falling from the
resistance, we can expect even more sellers entering the market if the price
breaks through the last swing low at 182.08.
Upcoming Events
Tomorrow we will get the latest US Jobless Claims
report and the market will want to see if the miss in Continuing Claims last
week was just a blip or the start of a trend. Later in the day, we will also
hear from Fed Chair Powell where the market will be focused on any hint about
the near-term policy outlook. On Friday, we will get the latest Japanese
inflation figures and the UK Retail Sales data.
Strong US data or a hawkish
Powell are likely to raise global yields, as we have seen yesterday with the
strong US Retail Sales data, and this could weigh on the Yen and support the
GBP. Conversely, weaker US data should lead to a fall in yields and support the
downside in GBPJPY, especially if the Japanese CPI beats or UK Retail Sales
miss.
