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The BOE is up today! Here’s why I’m looking at GBP/JPY for a potential trade over the next trading sessions.

Currency Snapshot:

Major Forex Pairs Price Performance from MarketMilk
Major Forex Pairs Price Performance from MarketMilk

Fresh Market Headlines & Economic Data:

Upcoming Potential Catalysts on the Forex Calendar:

  • Switzerland’s KOF economic barometer at 8:00 am GMT
  • Germany’s unemployment rate at 8:55 am GMT
  • Italy’s unemployment rate at 9:00 am GMT
  • Euro Zone’s unemployment rate at 10:00 am GMT
  • BOE’s monetary policy report at 12:00 pm GMT. What can you expect from the event?
  • U.S. advance GDP at 1:30 pm GMT

What to Watch: GBP/JPY

GBP/JPY 1-hour Forex Chart
GBP/JPY 1-hour Forex Chart

Other economic catalysts such as the FOMC’s statement, the signing of the USMCA deal, and the release of mid-tier reports got nothing on the Coronavirus scare on today’s Asian session trading. At least 7,700 now have confirmed cases of the virus with 170 of them resulting in death.

The economic impact of limited international travel and trade as well as businesses closing their shops have weighed on high-yielding bets and boosted safe havens such as the yen and the dollar. The former edged out the Greenback by a margin after the Fed’s dovish statement yesterday.

London session traders are now waiting on the Bank of England’s (BOE) policy statement. Between Britain’s official exit from the EU later this week and Carney’s last policy announcement, markets aren’t expecting policy changes from the central bank today.

That doesn’t mean we won’t see volatility, though! Word around is that BOE will adopt a “dovish hold” and maybe even lower their inflation forecasts in their monetary policy report.

If the BOE is more dovish than many are already expecting, then we could see GBP/JPY hit its 141.25 range support on the 1-hour. It could even break below the support and hit the 140.70 previous area of interest. Given that Guppy can move by at least 100 pips on Thursdays, this move is certainly possible.

Meanwhile, not-so-dovish statement and pressers can halt GBP/JPY’s bears around its current or 141.25 levels. Depending on how strongly the markets react, we could see a bounce from the range support.