Forex Market: GBP/JPY daily forecast

During yesterday’s trading session GBP/JPY traded within the range of 170.38-170.97 and closed at 170.51.

At 7:44 GMT GBP/JPY traded at 170.08, losing 0.33% for the day. The pair touched a daily low at 169.82 at 6:45 GMT, breaching the two key supports.

Fundamental view

The minutes of Bank of England will probably show that central bank’s policy makers were unanimous in keeping the interest rate unchanged at record low 0.5% at their last policy meeting on May 8.

The Bank of England was given the responsibility of determining the basic interest rates in 1998, in order to meet the challenges posted by the government inflation target. Decisions are taken by the Monetary Policy Committee of the central bank. The Committee consists of nine members and meets monthly. Minutes are usually published on Wednesday, two weeks after the policy meeting. The format of voting is number of members that voted for an increase of borrowing costs, number of members that wanted a reduction and the total number of members, that have voting rights.

If the minutes reveal the members weren’t unanimous in taking the decision, this would heighten the appeal of the pound as it can be an early indication that borrowing costs may be raised sooner-than-projected.

Bank of England is scheduled to release the minutes from its last meeting at 08:30 GMT.

In addition, Retail Sales in the UK probably rose 0.4% in April, according to the median analysts’ estimate. In March retail sales rose 0.1%.

The indicator measures the change in the volume of sales made by retailers in the UK. The information is derived from a monthly survey among major retailers. Higher volumes of retail sales mean greater consumer demand, higher production and economic growth. This is the percentage change in the index from the previous month.

On year-over-year basis, retail sales probably jumped 5.1% last month, following a 4.2% gain in March.

The Office for National Statistics is scheduled to release an official report at 8:30 GMT. Higher-than-expected readings will certainly heighten the appeal of the pound.

Technical view

According to Binary Tribune’s daily analysis, in case GBP/JPY manages to breach the first resistance level at 170.86, it will probably continue up to test 171.21. In case the second key resistance is broken, the pair will probably attempt to advance to 171.45.

If GBP/JPY manages to breach the first key support at 170.27, it will probably continue to slide and test 170.03. With this second key support broken, the movement to the downside will probably continue to 169.68.