• GBP/JPY is trading around 163.00, just under its 21DMA and more than 100 pips below earlier session highs.
  • Sterling bulls remain hard to find as pessimism about the UK economic and BoE tightening outlooks build.
  • But the pair still trades with gains of well over 1.0% on the day with the yen battered post-dovish BoJ.

Though the pair still trades more than 1.0% higher on the day as the yen continues to suffer in wake of the BoJ latest just as dovish as anticipated policy announcement during Thursday’s Asia Pacific session, GBP/JPY has reversed more than 100 pips lower from earlier session highs to the north of the 164.00 level and now trades back to the south of its 21-Day Moving Average at 163.25 near the 163.00 level.

Pound sterling has seen substantial weakness in recent trade, despite a lack of any definitive trigger of fundamental catalyst. Seemingly, the market remains very much in the mood to sell sterling in wake of a run of concerning data releases including last week’s dour March Retail Sales report and this week’s shocking UK government borrowing figures.

Hand and hand with UK growth concerns as the country suffer through its worst cost-of-living squeeze in decades is a growing sense that beyond a few more 25 bps rate hikes at upcoming meetings, there likely won’t be much more by way of monetary tightening from the BoE. As a result, it probably shouldn’t come as too much of a shock to see GBP/JPY’s bullish momentum fade.

Failure to reconquer the 21DMA might prove a bearish sign going forward, with some bears perhaps betting on an eventual retracement back lower to this week’s sub-160.00 lows and even a test of the 50DMA at 158.98 just below it. Of course, much will depend on whether the yen continues to crater. If the recent leg lower is the start of another larger bearish push, then GBP/JPY might find itself gradually moving higher towards last week’s highs above 168.00.

This article was originally published by Fxstreet.com.Read the original article here.


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