GBP/JPY Approaches Resistance: BoE Caution Fuels Sell-on-Rallies Setup

The GBP/JPY  recovered more than 100 pips after forming a bottom at 196.28. It hit an intraday high of 197.56 and is currently trading around 197.14..  Intraday trend is bearish as long as the resistance at 197.75 holds.    

Bank of England Governor Andrew Bailey underlined a clear deterioration in the UK labour market, pointing to this as a key element in the country's inflation outlook. He noted that although interest rates are predicted to fall slowly, the specific rate and timing would be influenced by future economic statistics, particularly given ongoing inflationary pressures such as wage growth outpacing inflation and high energy costs. Emphasizing that monetary policy choices will be made "meeting by meeting" cautiously, Bailey confirmed a progressive and data-driven approach to easing as the UK economy has recently contracted and inflation continues above the 2% target at 3. 4% in May.

‘The GBP/JPY pair is trading above 55 and 200 EMA (Short-term) and below 365 EMA (long-term) on the 15-min chart, confirming a  bullish trend.  Any violation below 196.70 indicates the intraday trend is weak. A dip to 196/195/194/193.70 is possible.  Immediate resistance is at 197.52, a breach above this level targets 197.75/198.35/198.80/200/202.

Market Indicators (15 min chart)

CCI (50)- Bullish

Directional movement index - Neutral

Trading Strategy:  Sell on rallies

 
 It is good to sell on rallies around 197.52-55 with SL around 198  for a TP of 196.30/195.90.