Global macro overview for 12/05/2017:
The Bank of England decided to leave the interest rate unchanged at the level of 0.25%. The Monetary Policy Committee voted by a majority of 7-1 to leave the rates unchanged and maintain the Asset Bond Purchases at the level of 425 bn Pound. In the statement, BoE confirmed that the suitability of the current policy would depend on inflation expectations holding steady while wages growth strengthened and that a weaker trend in household spending is offset by a pick-up in other components of demand. Nevertheless, some of the policy members stated that they will abandon their dovish point of view on interest rates if there is enough evidence of an upside momentum which reveals itself in GDP or inflation. In conclusion, the dovish tone dominated the BoE interest rate decision and further comments from BoE Governor Mark Carney. He said that the current monetary stimulus is appropriate thus causing sell-off of the British Pound across the board.
Let's now take a look at the GBP/JPY technical picture on the H4 timeframe. After the BoE interest rate decision, the market has broken below the technical support at the level of 146.69 and it is getting close to the important technical support at the level of 145.61. The momentum is clearly pointing to the downside and there is no sign of the oversold market yet. Nevertheless, the larger timeframe trend remains bullish, so after the corrective pullback the market should reverse and continue higher.
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