As the GBP continued to trade strongly against the JPY due to hawkish bets on the Bank of Japan, the GBP/JPY cross increased to 186.50 at the start of the week. Last week, the UK announced scorching inflation and wage numbers from July, prompting markets to discount a terminal rate of 6% against 5.75% at the start of the week, resulting in GBP finishing the week as the best performer.

According to sources, the Bank of Japan (BoJ) will only contemplate tightening if local wage and inflation numbers reach their projections. Dodgy wagers on the Bank of Japan depreciated the Yen. Furthermore, as one of Japan’s main trading partners, China’s weak economic state is pushing the JPY lower.

GBP/JPY Levels to Monitor
The daily chart analysis indicates that the short-term prospects for GBP/JPY are bullish. Both the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) stay positive, indicating that bullish momentum is building. Furthermore, the pair is above the 20-, 100-, and 200-day Simple Moving Averages (SMA), indicating that bulls continue to dominate on a larger scale.

Levels of support: 185.50 and 185.00

Levels of resistance: 187.50 and 188.00

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