The GBP/JPY exchange rate reached a multi-decade high of 196.14 following the Bank of Japan’s decision to leave interest rates unchanged at 0%. The Japanese yen has weakened significantly against other currencies, prompting speculation that the BoJ may intervene using its foreign reserves. However, previous interventions have had limited impact on the yen’s value. Governor Ueda stated that while currency rates are not a direct target of monetary policy, currency volatility could impact the economy and prices, potentially leading to adjustments in monetary policy.
Tokyo’s Consumer Price Index dropped in April, indicating a decline in inflation. The upcoming Bank of England decision is expected to keep interest rates at 5.25%, with possible rate cuts in future meetings due to decreasing inflation. The BoE anticipates inflation to reach its 2% target as energy prices decrease.
Technical analysis of the GBP/JPY pair shows a bullish outlook, with the exchange rate surpassing the upper side of a rising wedge pattern. Moving averages, MACD indicator, and Relative Strength Index all point towards further gains, with a target of 200. Stop-loss for the trade is at 194.