The GBP/JPY cross seesawed between tepid gains/minor losses through the early European session and was last seen trading just below the 162.00 round-figure mark.

The uptick, however, lacked bullish conviction and ran out of steam near the 162.70 region. As investors digested the BoJ's desperate move, extremely overbought conditions held back bulls from placing fresh bets around the GBP/JPY cross, instead prompted some long-unwinding.

On the other hand, the British pound was weighed down by the overnight dovish sounding remarks by the Bank of England Governor Andrew Bailey, saying that they are beginning to see evidence of a slowdown in economic growth. Bailey largely stuck to the tone from this monthly policy decision, wherein policymakers softened their language on the need for further interest rate hikes. This was seen as another factor that exerted pressure on the GBP/JPY cross.

Given the recent surge from sub-151.00 levels, or the monthly low touched on March 8, this might still be categorized as a consolidation phase. Hence, the corrective pullback is more likely to be short-lived amid expectations that the BoJ will stick to its ultra-lose policy stance.

Monday’s price action of the GBP/JPY formed an inverted hammer, a bearish candlestick, with a 230-pip large wick on top of the real body, suggesting that the cross-currency might correct further lower before resuming upwards.

That said, the GBP/JPY first support to test would be 162.00. A decisive break could pave the way for further losses. The following support would be March 28 daily low at 160.76, followed by March 25 daily low at 159.85.

Upwards, the GBP/JPY first resistance would be 163.00. Once cleared, there’s nothing in the way of another test of the YTD high around 164.65, only the 164.00 mark.

GBPJPY To Stage Some Losses Below 161.25

Mar 29 2022