The Bank of England appeared to rule out the idea of giving in to previous derivatives market pricing, which implied that the Bank Rate could reach 5% in the months ahead, crippling the Pound’s exchange rate against most other currencies and putting it at further risk.
Thursday’s decision to increase the Bank Rate by ¾ of a percentage point to 3% met market expectations, despite disappointment over the BoE’s latest economic predictions and warnings about indications for the interest rate outlook going forward.
Meanwhile, Japanese Finance Minister Suzuki warned, that Japan could intervene in the currency market “at any time” to support the Yen. Trading activity in the Yen was weak on Thursday, with Japanese markets closed for the Culture Day holiday.
GBPJPY fell more than -1.7% in Thursday’s trading, the 4th day of the decline that started at the beginning of this week. Price was seen breaking the lower line of the Rising Wedge pattern, to equate to a weekly low around 165.00. The divergence bias on the H4 period is clearly visible. On the downside, further declines could test the 159.72 support, while on the upside the 168.41 price level might be a re-test area, to bring another decline in the short term. Currently, the price is below Kumo with Tenken-sen and Kinjun-sen crosses on the upside.
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Market Analyst – HF Educational Office – Indonesia
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