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GBP/JPY testing the upside on 174 handle

FXStreet (Barcelona) - GBP/JPY is trading at 174.01, up 0.09% on the day, having posted a daily high at 174.15 and low at 173.55.

GBP/JPY is attempting to reclaim the 174 handle after failures all the way from the vicinity of 175 overnight and throughout European and US sessions. The BoJ with no surprises there is now out of the way and attention turns onto sterling.

GBP/JPY as a trade off between central banks

The BoE is expected to leave rates on hold this month while there will not be a statement if so. Keeping in mind also with there being less of a robust performance from the UK economy of late, with soft wage growth in particular in recent months, it is unlikely that there will be any additional voting members on the side of Weale and McCafferty voting for an immediate rate rise of 25bps. On that basis, we can understand an excuse for a higher dollar on the pound. Should the US stock markets continue to come off then the JPY is likely to maintain its safe haven status and continue testing the commitment of the GBP/JPY bulls in this current descending trend. On the other hand, should the minutes from the FOMC reveal a hawkish tone, this trend may begin to level out somewhat and find a temporary bottom at least.

GBP/JPY noteworthy levels

With spot trading at 174.02, we can see next resistance ahead at 174.23 (Hourly 20 EMA), 174.46 (Daily Classic S1), 174.97 (Daily Classic PP) and 175.14 (Hourly 100 SMA). Support below can be found at 173.96 (Daily Classic S2), 173.87, 173.69 and 173.69 (Weekly Classic S1).

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