GBPJPY has formed higher lows and lower highs on its 4-hour chart, creating a symmetrical triangle pattern. The pair is just coming off a test of the resistance and might be aiming for the bottom of the triangle around 132.50.
However, the 100 SMA just crossed above the longer-term 200 SMA to signal that the path of least resistance is to the upside. In that case, an upside break of the triangle resistance at the 137.50-138.00 levels could be possible, likely taking GBPJPY up by 1500 pips or the same height as the chart formation.
Stochastic is on the move down, though, so sellers could still have some momentum left to trigger a test of the triangle support. Still, the moving averages around the middle of the triangle at 134.00 could hold as dynamic inflection points.
There are plenty of event risks from the UK economy this week, including the CPI numbers due today. Another uptick in price levels is eyed, with the headline figure slated to rise from 0.6% to 0.7% and the core reading expected to climb from 1.3% to 1.4%.
Tomorrow has the jobs data lined up but a pickup in joblessness is eyed, along with a drop in the average earnings index from 2.4% to 2.1% to show lower wages and downside inflation pressures. Thursday has the UK retail sales report due but the main mover could be the BOE decision.
No actual policy changes are expected for now since the UK central bank just eased last month. However, some policymakers might still vote for additional stimulus, depending on how this week’s set of data turns out. Dovish remarks or a split in the MPC bias could mean pound weakness. As for the yen, the BOJ decision is set to take place on September 20 and easing expectations could also keep a lid on the currency’s gains.