Economy Forex News

GBP/JPY falls below 154.00 on BoE’s monetary policy stance

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  • The British pound lost 300 pips to 153.00 on the BoE’s decision to keep rates unchanged at 0.10%.
  • The BoE’s decision is based on a weaker labor market as the leave program ended in September.
  • GBP/JPY: Key support/resistance area at 153.50, a daily close above would keep bulls in control, otherwise bearish.

GBP/JPY is slumping, down 1.50%, trading at 153.56 during the U.S. session at the time of writing. Market sentiment is upbeat as the Federal Reserve said it would begin reducing bond asset purchases by $15 billion in mid-November while delaying an interest rate hike.

Investors interpreted this as a signal to push stocks to new highs, while risk-sensitive currencies fell against the dollar.

GBP/JPY

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The BoE and MPC decided to keep interest rates unchanged at 0.10 percent.

In terms of GBP/JPY, the Bank of England’s (BoE) Monetary Policy Committee (MPC) decided to keep interest rates unchanged at 0.10 percent on Thursday. Despite some members, including BoE Governor Bailey, expressing concerns about high inflation in the weeks leading up to the meeting.

According to the MPC statement, the reason for keeping the rate unchanged is that “it will be necessary to raise the Bank Rate in the coming months if data, particularly employment data, are in line with the forecast.” They went on to say that “the MPC continues to see value in waiting for official labor market data. After the end of the leave before deciding on tighter policy.”

The bank had spent £895 billion on asset purchases. In terms of high inflation, the Bank of England “predicts that inflation will peak at 4.80 percent in the second quarter of 2022.” Furthermore, based on market interest rates, the UK central bank forecasts two-year inflation at 2.23 percent.

Investors positioned in favor of a BoE rate hike, based on the GBP/JPY price action.

The GBP/JPY price action on Thursday shows that investors positioned for a BoE rate hike. But sterling collapsed as a result of the BoE disappointment. As GBP/JPY fell from 156.00 to 153.00, the average daily range (ADR) for the day is 300 pips.

It is worth noting that the pair briefly approached the 50-day moving average (DMA) at 153.00. And bounced, indicating that the market found buyers at that level. GBP/JPY bulls, on the other hand, would need a daily close above the July 29 high of 153.50 to maintain control. As a result of that result, a retest towards 154.00 is in play.

Failure at the aforementioned challenge, on the other hand, would open the door to another 153.00 challenge. A break of the latter would allow for further losses, exposing the 100 DMA at 152.60 and the 200 DMA at 151.74.

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Michelle D. Madsen

Michelle D. Madsen graduated from the University of Westminster and has been deeply involved in the world of finance ever since. She has worked as a Broadcast Journalist hosting various news shows and informative webcasts about the financial markets. Since 2004 she has also been writing for Metanews daily, her attention to detail, and her in-depth knowledge of the financial markets have led her to cover Foreign Exchange and commodities. The world of finance has changed in the last few years with the introduction and rising popularity of cryptocurrencies. She has in no means been left behind, adding this to her bank of intellect and is now also an expert in cryptocurrencies. For the last ten years, Ms. Madsen has been engaged in the financial market. She has notedly written a great number of incredibly informative reviews for the crypto exchange and forex brokers. Her wealth of knowledge has enabled her to become a leading expert in the field. She continues to inform the public writing up-to-date, thorough reviews for the readers of Metanews as she has for the last decade.
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