The pound was very calm on Thursday and was trading unchanged during the London as traders are preparing for the Bank of England monetary policy decision later in the day. Therefore, the GBPJPY cross was oscillating around 145.20 in the morning.
The BoE is widely expected to leave monetary policy unchanged, with 7 MPC governors seen voting for this step, while 2 MPC governors expected to vote for a rate hike. The main rate will therefore stay unchanged at 0.50%.
As usually, the main focus will be on the following statement, where the BoE can either hint at a rate hike in August (currently around 50% chance quoted by the markets) or confirm the weak state of the UK economy, which might mean that another rate hike will be postponed into late 2018.
Sterling will most likely be volatile after the decision and should the BoE delay the rate hike, we could see a bigger decline.
The GBPJPY cross edged back above the previous lows of 145.00, which is the first strong support for today. If broken, sterling could deteriorate to the current cycle lows at 143.00. The cross remains below the bearish trend line, which supports the bearish outlook.
The resistance is now at 146.00 and afterward 50 pips higher, where the bearish trend line is located. In all cases we strongly recommend to have rigorous money and risk management.
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