Market news
16.06.2022, 12:01

GBP/JPY rebounds from post-BoE swing low, moves back above 161.00 mark

  • GBP/JPY witnessed aggressive intraday selling on Thursday and dived to over a three-week low.
  • The risk-off impulse benefitted the safe-haven JPY amid some repositioning trade ahead of BoJ.
  • The British pound lost ground after the BoE announced the expected 25 bps interest rate hike.

The GBP/JPY cross attracted some intraday selling near the 163.75-163.80 region on Thursday and dived to its lowest level since May 27 after the Bank of England announced its policy decision. The cross, however, quickly recovered over 100 pips and was last seen trading above the 161.00 round figure.

The US central bank projected a slowdown in economic growth and rising unemployment in the months to come on Wednesday. The Fed's gloomy outlook added to market concerns that a more aggressive move by major central banks to curb inflation would pose challenges to the global economic recovery.

Apart from this, the global supply chain disruptions caused by the Russia-Ukraine war and the latest COVID-19 lockdowns in China further fueled recession fears. This, in turn, took its toll on the risk sentiment, which boosted demand for traditional safe-haven assets and benefitted the Japanese yen.

This, along with some repositioning trade ahead of the Bank of Japan meeting on Friday, forced investors to lighten their bearish bets around the JPY. This was seen as a key factor that exerted some downward pressure on the GBP/JPY cross, which lost additional ground after the BoE announcement.

As was widely anticipated, the UK central bank decided to hike interest rates for the fifth consecutive time to curb soaring inflation. The nine-member Monetary Policy Committee (MPC) voted 6-3 for the 25 bps hike in the bank rate from 1.0% to 1.25%, with the minority voting for a 50 bps increase.

In the accompanying policy statement, the BoE noted that it was ready to act "forcefully" to stamp out dangers posed by the persistent rise in inflationary pressures. This suggested that the central bank would opt for a more gradual approach amid recession fears and weighed on the British pound.

Despite the negative factors, the GBP/JPY cross showed some resilience near the 160.00 psychological mark and found some support just ahead of the 100-day SMA. This warrants caution before positioning for an extension of the recent sharp pullback from a multi-year peak touched earlier this month.

Technical levels to watch

 

© 2000-2024. All rights reserved.

This site is managed by Teletrade D.J. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).

The information on this website is for informational purposes only and does not constitute any investment advice.

The company does not serve or provide services to customers who are residents of the US, Canada, Iran, The Democratic People's Republic of Korea, Yemen and FATF blacklisted countries.

AML Website Summary

Risk Disclosure

Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.

Privacy Policy

Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to teletrade.org. Automatic import of materials and information from this website is prohibited.

Please contact our PR department if you have any questions or need assistance at pr@teletrade.global.

Bank
transfers
Feedback
Live Chat E-mail
Up
Choose your language / location