GBP/JPY – breaks 23.6% Fibo support, Eyes BOE rate decision

The bid tone around Yen picked up pace in Asia, pushing the GBP/JPY cross below 136.93 (23.6% of May 31 high – July 6 low).

Will BOE deliver or under-deliver?

The question on everyone’s mind is whether the Bank of England (BOE) will announce a rate cut today (deliver) or stay pat and strongly indicate rate cut and/or QE in the next meeting (under-deliver).

Most investment banks are of the opinion that massive BOE easing is a done deal and the Pound is seen weakening sharply by year end.

In the meantime, expectations of fresh fiscal stimulus in Japan are keeping the Yen under pressure as well. Hence, it will be interesting to see who gains an upper hand initially. As of now, BOE appears to be winning, although Abenomics is not far behind.

GBP/JPY Technical Levels

At the time of writing, the pair had recovered slightly from the daily low of 136.39 to 136.80. Recovery above 136.93 (23.6% of May 31 high – July 6 low) would expose 139.01 (June 29 high). A violation there could yield 140.00 (zero figure). On the other hand, a breakdown of support at 136.00 (zero figure) would open doors for a slide to support at 135.70 (July 1 low) and 133.21 (June 24 low).