The GBPJPY price turned bearish after the Bank of England commented on stagflation fears. This could see the price re-test a key zone of 157.00.
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The GBPJPY price could come under further selling pressure as the Bank of England raises rates to 1.00%. The Bank of England outlined a problem which is stagflation, this occurs when the inflation rate is high as well as unemployment. Raising the interest rate can lead to an increase in unemployment so the Bank of England have to find a balance between trying to decrease the unemployment rate but try to control the rising inflation. This is why fears of recession are growing in the UK which will likely see the GBP continue to devalue.
The weekly chart shows the price is creating successive bearish closes showing the momentum is with the sellers at the moment. If the price is going to continue lower we could see the price retest the previous major highs around 157.00. This area has been tested many times before and could be tested again as support in the overall trend. If the price moves towards this level we should see the trend on the lower time frame continue to remain bearish. This could offer a short trading opportunity at the previous supply zone. If the price forms bearish price action or a lower time frame reversal pattern we can look for short opportunities.
Do you use the USD Index? You can see our recent analysis of it here.
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