GBP/JPY Forecast: Bulls Eying 156.00 in Wake of Hawkish BoE

• The combination of factors helped GBPJPY to buy on the downside around 155.00.
• Sterling’s early decline was limited by interest rate hike speculation from the Bank of England, which supported the currency.
• A renewed demand for dollars put pressure on the yen and increased the risk of a Bank of England event.

The GBP/JPY price forecast is bullish as the BoE’s rate hike speculation continues to underpin the demand of the British pound while the better risk mood weighs on the JPY.

In the London session, the GBP/JPY price recovered from its intraday decline to climb to a two-week high near 155.40.

On Thursday’s move lower near the key psychological level of 155.00, the cross attracted some buying and is now moving into positive territory for a fourth straight session. The recent bounce from below 153.00 or the 200-day SMA mark can be viewed as support for bulls.

As the Bank of England is expected to hike interest rates at its meeting today, the British pound has been supported. Meanwhile, renewed demand for the US dollar put pressure on the Japanese yen. As a result, the GBP/JPY pair was able to gain some support and limit the early decline.

Investors, however, may refrain from aggressive bets, preferring to keep a low profile ahead of the possibility of a BoE event. The Bank of England will announce its first consecutive rate hike since 2004 and announce plans to scale back its £895 billion quantitative easing program.

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The British pound will be influenced by this announcement, and GBP/JPY will gain some momentum. In addition, ECB’s monetary policy decision could boost demand for the safe-haven yen and lead to some volatility in the markets. However, this may also allow traders to capitalize on short-term opportunities around the crossover.

GBP/JPY price technical forecast: Bulls heading higher

The GBP/JPY price remains well bid above the 155.00 mark. The cross is wobbling around the horizontal level of 155.50 that may resist further gains. However, the key SMAs on the 4-hour chart continue to provide support. The volume pattern suggests further gains as the up bars closing near the highs above 20-period SMA have a very high volume. The down bars have very low volume. This combination signals a high probability for the uptrend continuation.

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The resistance levels lie at 155.80 ahead of 156.50 and then 157.00. Alternatively, the support levels are at 155.00 ahead of 154.45 and then 153.85.