GBP/JPY is expected to trade with a bullish bias above 139.55. European stocks halted their recent rally, with the Stoxx Europe 600 declining 0.1%. The British pound fell against the US dollar yesterday after rising 2.6%, or 335 pips, in a winning streak that spanned the prior three sessions, as the focus turned to the Bank of England's meeting tonight, where it is widely expected that the central bank would lower its key interest rate to 0.25% from 0.50% and launch another round of quantitative easing to shield the economy from the fallout of last month's Brexit vote. The pair stays above 136.10 and remains on the upside. Even though a continuation of the consolidation cannot be ruled out, its extent should be limited. Further upside is expected with 139.55 and 141.00 as targets.
Trading recommendations:
The pair is trading above its pivot point. It is likely to trade in a wider range as long as it remains above its pivot point. Therefore, long positions are recommended with the first target at 139.55 and the second one, at 141.00. In the alternative scenario, short positions are recommended with the first target at 134.85 if the price moves below its pivot points. A break of this target is likely to push the pair further downwards, and one may expect the second target at 133.70. The pivot point is at 136.10.
Resistance levels: 139.55, 141.00, 142
Support levels: 134.85, 133.70, 133.00
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