GBP/JPY is under pressure. The pair has been capped by its descending 50-period moving average, and remains on the downside. Meanwhile the relative strength index stays below 50.As widely expected, the Bank of England cut its key interest rate by 25 basis points to a record low of 0.25%. However, the first rate cut since 2009 came with an unexpected quantitative easing package as the central bank said it would buy 60 billion pounds of government bonds and 10 billion pounds of corporate bonds, and launch a scheme to ensure banks pass on the rate cut to borrowers. The central bank also said it expects the U.K. economy to stagnate for remainder of 2016 and even weaken in 2017. As long as 134.40 holds as the key resistance, a drop toward 131.10 is possible.
The pair is trading below its pivot point. It is likely to trade in a lower range as long as it remains below the pivot point. Short positions are recommended with the first target at 132.15. A break below this target will move the pair further downwards to 131.10. The pivot point stands at 132.40. If the price moves in the opposite direction and bounces back from the support level, it will move above its pivot point. It is likely to move further to the upside. According to that scenario, long positions are recommended with the first target at 136.30 and the second one at 137.10.
Resistance levels: 136.30, 137.10, 137.95
Support levels: 132.15, 131.10, 130.25
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