GBP/JPY Sinks Ahead of BOJ: Bearish Trend Confirmed, 197.40 Key Support

The GBP/JPY pared some of its gains ahead of BOJ's monetary policy. It hit an intraday low of  197.44 and is currently trading around 197.66.  Intraday trend is bearish as long as the resistance at 199.20 holds.

The Bank of Japan is generally anticipated at its July 30–31 meeting to keep its short-term policy rate at 0. 5%, continuing its cautious attitude amid inflation reaching above its 2% target (Tokyo core CPI at 2. 9% y/y in July) and ongoing world uncertainties. The July 31 statement will probably reaffirm a data-driven approach, update the quarterly economic outlook—perhaps with somewhat more optimistic growth projections after recent U. S. trade events—and suggest that any future tightening, including the much-discussed October rate hike, will rely on sustained inflation backed by wage increases and more general economic momentum.

The GBP/JPY pair is trading below  55 and  200 EMA (Short-term) and 365 EMA (long-term) on the 60-min chart, confirming a bearish trend.  Any violation below 197.40 indicates the intraday trend is weak. A dip to 196.70/196.25/195.25/194/193.70 is possible.  Immediate resistance is at 197.85, a breach above this level targets 198.40/198.85/199.20/200/202/204.

Market Indicators (60-min chart)

CCI (50)- Bearish

Directional movement index - Bearish

Trading Strategy:  Sell

 
 It is good to sell on rallies around 198.28-30 with SL around 199.20  for a TP of 196.15/194.85