GBPUSD USDJPY Market Insight

GBP/USD

Investors are guessing rate increase cycle of BOE that is coming to an end after inflation unexpectedly slowed to its lowest level in 18 months. On Wednesday, the UK National Statistics indicated that the consumer price index (CPI) rose 6.7% in August, down from 6.8% the previous month. Economists had expected growth of 7%. Investors responded by scaling back bets on further sharp tightening policy, it is pushing the Pound to its lowest level since May and spurring gains in government bonds.

We can see GBP/USD tried to make upward breakthrough but failed owing to UK CPI unexpected lower than predication. The price was limited by 48 hours moving average that is strong resistance on H4 chart. On the other hand, MACD histogram bar and double line has constituted dead cross which would guide investors to put more short positions. Thus, the sell limit could be used between 1.2360 to 1.2400.

USD/JPY

The yield curve control of Bank of Japan and negative interest rate policy is likely to be withdrawn by mid-2024, and Japanese stocks will continue to rise because of raising wage from government. The minimum wage will be increased by a record in October and plans to raise by 50% in mid-2030. According to such efforts of government, BOJ will move towards policy normalization, eliminating YCC early next year and negative interest rates in mid-2024.

As we mentioned before, the USD/JPY will not change its uptrend easily since BOJ long term target is to keep inflation rate above 2%. We can see the price is moving upwards based on moving average system, it is strong sign on H4 chart. In addition, MACD histogram bar and double line is running above zero axis, the buy limit or buying tactic could be employed, stop loss is necessary.

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