“¢ A more hawkish outlook for rate increase provides a minor lift to the GBP.
“¢ Risk-on mood weighs on JPY’s safe-haven status and remains supportive.
The GBP/JPY cross jumped to the 146.00 neighborhood, or over one-week tops, with bullish traders now looking to build on the up-move further beyond 100-day SMA post-BoE.
After a mid-European session dip to the 145.20 region, triggered by negative Brexit headlines, the cross caught some fresh bids and built on its strong intraday bullish momentum following the latest BoE monetary policy update.
As was widely expected, the BoE MPC voted unanimously to leave interest rates/asset purchase facility unchanged at 0.75% and £435 billion respectively but portrayed a more hawkish outlook for rate increases.
In the accompanying quarterly inflation report (QIR), the central bank noted that market interest rate path implies a slightly steeper rise in bank rate and could reach 1.4% by late 2021 as compared to 1.1% anticipated in August.
Meanwhile, bullish traders seemed to have largely shrugged off a downward revision of the central bank’s GDP growth forecasts, now seen at 1.3% for 2018 and 1.7% for 2019 as compared to 1.4% and 1.8% projected in August.
The up-move remained supported by the prevalent risk-on mood, which was seen weighing on the Japanese Yen’s safe-haven status. This coupled with some fresh technical buying above 100-day SMA should continue to fuel the pair’s ongoing strong bullish momentum.
Technical levels to watch
Momentum beyond the 146.00 handle is likely to confront some resistance near the 146.30-35 region, above which the cross seems all set to aim towards reclaiming the 147.00 round figure mark.
On the flip side, the 145.25-20 region now becomes an immediate support to defend, which if broken might prompt some additional weakness, even below the key 145.00 psychological mark.
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