- A combination of factors pushed GBP/JPY to new multi-year highs on Tuesday.
- Recent hawkish signals from the Bank of England continued to underpin sterling.
- The risk appetite mood undermined the safe haven JPY and contributed to the rally.
The GBP/JPY pair added to its intraday gains and soared to the highest level since June 2016 around the 157.60 region during the first half of the European session.
Following the previous day’s price consolidation moves, the GBP/JPY pair caught fresh bids on Tuesday. Furthermore resumed its strong upward momentum seen since the start of this month. There were multiple factors supporting this move, marking the ninth consecutive positive day in the previous ten.
In recent days, Bank of England officials have made hawkish comments, suggesting an imminent hike in interest rates later this year. BoE Governor Andrew Bailey said the central bank must act amid rising risks to medium-term inflation expectations.
Sterling continues to benefit from a positive Brexit development, which provided a strong boost to the GBP/JPY pair. The European Union agreed to remove most controls on goods entering Northern Ireland from the rest of the UK.
On the other hand, underlying bullish sentiment in financial markets undermined the relative safe haven status of the Japanese yen. As a result, some trading stops were placed near the 157.35-40 area as another contributing factor to the GBP/JPY pair’s upward trajectory.
In the absence of any major market-moving economic releases, it appears that the GBP/JPY pair will continue to appreciate. In any case, the extremely overbought conditions on the short-term charts warrant caution for bullish traders ahead of Wednesday’s UK consumer inflation figures.
Today’s Last Price 157.84
Daily Rate 0.90
Today’s Daily Rate % 0.57
Daily Open 156.94
20 Daily SMA 152.35
50 Daily SMA 151.78
100 Daily SMA 152.5
200 Daily SMA 150.89