GBP/JPY slammed below 147.00 handle after BoE

The GBP/JPY cross extended its corrective slide from near 5-month highs touched yesterday and slipped below the 147.00 mark after the BoE announcement.

Spot ran through some fresh offers after the central bank, in its keenly watched quarterly inflation report, lowered its GDP growth forecast for 2017 to 1.9% from 2.0% projected earlier. Adding to this, the central bank also trimmed its inflation forecast for 2018 and 2019, which weighed on the British Pound. 

The selling pressure, however, seems to have abated, at least for the time being, in wake of a slight upgrade to the central bank's GDP growth forecast for subsequent years (2018 and 2019). 

Earlier, minutes of the BoE meeting revealed MPC members voted 7-1 to leave interest rates unchanged at record low level of 0.25%, with Forbes once again maintaining her call for a hike. Meanwhile, there was a unanimous vote to keep corporate and government bond purchase programs unchanged at £10 billion and £435 billion respectively.

Against the backdrop of uncertainties surrounding Brexit negotiations and given the proximity of a snap general election in the UK, a slightly dovish BoE prompted traders to lighten their bullish bets following the pair’s recent up-surge of over 1200-pips since mid-April. 

Technical outlook

Omkar Godbole, Analyst and Editor at FXStreet writes: “The near 90 degree rally in the GBP/JPY since April 17 has pushed the RSI into the overbought territory. The MACD also shows the loss of the bullish momentum. Hence, a minor pull back to 10-DMA level of 145.95 cannot be ruled out. Note, the 5-DMA and 10-DMA are still sloping upwards, which suggests the dips below the 10-DMA could be quickly reversed.”