The GBPJPY currency pair is enjoying a rare bullish session after gaining over 0.3% as the Japanese inflation remained above the Bank of Japan’s 2% target for the 15th consecutive month in June. The data released on Friday showed a slight uptick in inflation, reaching 3.3% year-on-year in June, surpassing the previous month’s figure of 3.2%. Despite the rise, it fell short of the market’s forecast of 3.5%. The core inflation rate, excluding fresh food costs, mirrored the overall trend, reaching 3.3%, aligning with market expectations.
With inflation having exceeded the BoJ’s target for more than a year, markets are simmering with speculation the BoJ could soon phase out its controversial yield curve control (YCC) policy as early as next week. However, the slowdown in core inflation in June may give the BoJ some breathing room and could lead to expectations of a delay in the central bank’s exit from monetary easing, weighing on the Japanese Yen during the session.
On the 4H chart, an ascending triangle has formed, with the price action testing the resistance at the upper end of the triangle. A breakout could boost the upward momentum towards 181.101 and 181.595. From there, sustained momentum could see the price action test higher resistance at 182.054.
However, if resistance holds, support at 180.631 could be the first barrier to the downside, where support at 180.175 could be the final barrier to prevent a test at the triangle support of 179.788. From there, a breakdown could move the price action to lower support at 179.417.
The GBPJPY currency pair is trending higher due to inflation remaining above the BoJ’s target, encouraging gains for the Sterling towards the 182.054 resistance. However, a breakdown of the triangle support could edge the price action towards the 179.417 support.
Sources: TradingView, Trading Economics, CNBC, Reuters
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