GBPJPY Extends Steep Downtrend Amid BOJ Rate Hike and BoE Cut Expectations

GBPJPY dropped 1.7% on Wednesday, continuing its steep downtrend and heading for the biggest daily drop since July 12, 2023. This decline follows the Bank of Japan’s rate hike, which further strengthened the yen, while the sterling remains pressured by growing expectations of a 25 basis point rate cut by the Bank of England tomorrow.

Markets are also focused on today’s Fed rate decision at the conclusion of the two-day policy meeting. Investors expect Chair Powell to reinforce expectations for three rate cuts by the end of the year, likely starting in September.

The fresh acceleration lower has pushed the price well below the ascending daily cloud (spanning between 196.50 and 200.39) and broken below the 50% retracement of the 178.73/208.11 rally (193.42), hitting the lowest level since early May.

Bears are now targeting the next significant support at 191.66 (200DMA), where stronger headwinds could be expected due to oversold daily studies.

Upticks should be capped under the daily cloud base (196.50) to maintain bearish momentum for a fresh push lower and a possible test below the 190 mark, as the BOJ’s fresh hawkish stance and the dovish outlook for the BoE continue to weigh on the pair.

Res: 193.42; 195.04; 196.50; 197.37
Sup: 191.66; 191.35; 190.29; 189.95