GBPJPY, H4
The BoE voted to keep Bank Rate at 0.25%, continue with the program of GBP 60 bln government bond purchases to bring the total stock to GBP 435 bln and to also continue with sterling non-financial investment grade corporate bond purchases up to GBP 10 bln, financed by the issuance of central bank reserves. However, contrary to expectations the decision to leave Bank Rate on hold was not taken unanimously, but with a majority of 8-1, with Forbes opting for a rate hike already. The central scenarios from the February inflation report still seem to remain intact, but the central bank not surprisingly also highlighted once again the heightened uncertainty and in conclusion still maintained a neutral stance and kept all options open as the country heads for divorce proceedings with the EU. Earlier in the week the BoJ left monetary policy unchanged, as expected. BoJ’s Kuroda said the bank will continue “powerful monetary easing” under yield curve control framework “to achieve the price target at the earliest date possible.” He noted that inflation has been moving sideways while saying that “momentum for inflation to accelerate to 2 percent remains in place but lacks strength.”
The surprise out London following the “no change” from Tokyo – prompted a rally in the GBPJPY back through the key 140.00 level and then retrace to 139.70 area. The re- break of 140.00 earlier today prompted a long position on the 4 hour chart with target at the 14 period ATR at 140.50. The 4 hour chart shows support at 139.85 (20 period moving average) and 139.50 and with the pair displaying a bullish bias with RSI at 58 and rising the risk reward on this position is promising.
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Stuart Cowell
Senior Market Analyst
HotForex
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