GBP/JPY - Carney’s rate hike rejection yields a bearish outside day candle, what’s next?

“Now is not the time to raise rates”, said BoE Governor on Tuesday, leading to a broad based sell-off in the British Pound. 

The GBP/JPY pair fell from the high of 142.54 to 140.73, thus engulfing the price action seen on Monday - bearish outside day candle. 

The cross extended losses to a four-day low of 140.46 in Asia as the demand for the Japanese Yen strength on the back of the oil-led weakness in the US and Asian equity markets. Moreover, oil dropped into the bear market yesterday and that could keep the European stocks under pressure and Yen well bid. 

It is also being reported that May’s DUP talks have faltered. The political uncertainty only adds to the bearish pressure around Pound. The currency pair looks set to extend losses during the day ahead. 

GBP/JPY Technical Levels

The currency pair was last seen trading around 140.55 levels. The 1-hour RSI is oversold and the MACD has turned bullish. Thus, a breach of 1-hour 200-MA of 140.73 could yield a correction to 141.00 (zero levels) and 141.73 (1-hour 100-MA). On the downside, breach of support at 140.00 (zero levels) would open doors for a sell-off to 139.19 (June 15 low) and 138.67 (June 12 low).