After the US Fed kept interest rates unchanged yesterday, in a move which was widely expected, it did sound a more dovish tone and opened the way for an interest rate cut as soon as its next meeting. Today it will be the Bank of England’s turn as economists expect no change in monetary policy while the leadership race for a new PM is narrowing down. The British central bank is turning slightly more hawkish and sentiment towards a potential interest rate increase rose yesterday as inflation picked up. The British Pound rallied off of strong support levels, but will this trend extend in the GBPJPY currency pair? Today’s fundamental analysis will take a look at where price action may be headed over the next few trading sessions.

Here are the key factors to keep in mind today for British Pound trades:

• UK Retail Sales: UK Retail Sales for May are predicted to decrease by 0.5% monthly and to increase by 2.4% annualized. Forex traders can compare this to UK Retail Sales for April which decreased by 0.2% monthly and which increased by 4.9% annualized. UK Retail Sales Including Auto and Fuel for May are predicted to decrease by 0.5% monthly and to increase by 2.7% annualized. Forex traders can compare this to UK Retail Sales Including Auto and Fuel for April which were reported flat at 0.0% monthly and which increased by 5.2% annualized.
• Bank of England Interest Rate Decision, Asset Purchase Target and Corporate Bond Target: The Bank of England is predicted to keep interest rates at 0.75%, the Asset Purchase Target £435B and the Corporate Bond Target at £10B. Forex traders can compare this to the previous Bank of England meeting where the UK central bank decided to keep interest rates at 0.75%, the Asset Purchase Target £435B and the Corporate Bond Target at £10B.

The Bank of Japan kept its monetary policy unchanged which was anticipated by markets. Japan started to turn against its central bank’s easy monetary policy which has been in place for over two decades. The Bank of Japan now owns over 80% of the public Japanese market, but the Japanese Yen maintained its safe haven status as the global economy is cooling down sharply and the Trump administration is waging trade wars as well as using tariffs to force changes in trade policies. The Japanese Yen is due for some profit taking, but will it materialize or will bulls keep pushing price action? Online forex trading accounts are overweight the Japanese Yen, but how long will this trend last?

Here are the key factors to keep in mind today for Japanese Yen trades:

• Japanese Buying Foreign Bonds and Japanese Buying Foreign Stocks/Foreign Buying Japanese Bonds and Foreigners Buying Japanese Stocks: Japanese Buying Foreign Bonds for the period ending June 14th was reported at ¥327.3B and Japanese Buying Foreign Stocks was reported at ¥232.5B. Forex traders can compare this to Japanese Buying Foreign Bonds for the period ending June 7th which was reported at ¥1,739.7B and to Japanese Buying Foreign Stocks which was reported at ¥30.6B. Foreign Buying Japanese Bonds for the period ending June 14th was reported at ¥471.7B and Foreigners Buying Japanese Stocks was reported at -¥95.4B. Forex traders can compare this to Foreign Buying Japanese Bonds for the period ending June 7th which was reported at ¥590.0B and to Foreigners Buying Japanese Stocks which was reported at -¥148.0B.
• Bank of Japan Policy Rate and 10-Year Yield Target: The Bank of Japan Policy Rate was reported at -0.10% and the 10-Year Yield Target at 0.00%.Economists predicted a level of -0.10% and of 0.00%. Forex traders can compare this to the previously announced Bank of Japan Policy Rate which was reported at -0.10% and to the 10-Year Yield Target which was reported at 0.00%.
• Japanese All Industry Activity Index: The Japanese All Industry Activity Index for April increased by 0.9% monthly. Economists predicted an increase of 0.7% monthly. Forex traders can compare this to the Japanese All Industry Activity Index for March which decreased by 0.3% monthly.

Should price action for the GBPJPY remain inside the or breakout above the 136.250 to 137.000 zone the following trade set-up is recommended:

• Timeframe: D1
• Recommendation: Long Position
• Entry Level: Long Position @ 136.600
• Take Profit Zone: 140.700 – 141.700
• Stop Loss Level: 135.800

Should price action for the GBPJPY breakdown below 136.250 the following trade set-up is recommended:

• Timeframe: D1
• Recommendation: Short Position
• Entry Level: Short Position @ 135.800
• Take Profit Zone: 133.400 – 133.900
• Stop Loss Level: 136.250

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