Chart of the day - GBPJPY (06.02.2023)

GBPJPY is trading slightly higher this morning. The pair recovered from an earlier drop following comments from BoE Mann. Mann struck a hawkish tone saying that he still sees material upside risks to the inflation outlook and the Bank of England should seek a significant and sustained drop in inflation. Most importantly, Mann said that he sees another rate hike as the mostly likely move from the Bank of England. Meanwhile, JPY sees some volatility amid speculation who the next BoJ Governor will be. There was some media chatter that BoJ Deputy Governor Amamiya may succeed Governor Kuroda and will be tasked with normalizing Japanese monetary policy. However, the ruling party spokesman denied that the nomination process is in the final stages. GBPJPY may see some more volatility later today when BoE Chief Economist Pill delivers a speech at 5:00 pm GMT.

Taking a look at GBPJPY chart at H4 interval, we can see that the pair tries to break above the resistance zone marked with 23.6% retracement of the downward move launched in late-October 2020 as well as 200-period moving average (purple line). A break above would pave the way for a test of the upper limit of the trading range marked with 38.2% retracement (161.90 area). On the other hand, should bulls fail to break above and the pair starts to pull back, the 156.75 area will be the first support zone to watch.

Source: xStation5