Markets are entering a pivotal week as traders brace for a wave of high-impact economic events and central bank decisions that could shape currency trends and broader risk sentiment. Attention will center on key employment data from New Zealand, the U.S., and Canada, as well as interest rate decisions from the Federal Reserve and Bank of England. While the Fed is expected to hold steady, the BoE is widely anticipated to deliver a rate cut in response to slowing growth and elevated trade uncertainty. Meanwhile, the Bank of Japan has adopted a cautious stance, leaving rates unchanged and downgrading its economic outlook. In this environment, GBPJPY has entered a bullish phase, with technical momentum favoring further upside, though geopolitical risks and central bank commentary could test investor conviction.
Overview
Markets are entering a pivotal week as traders brace for a wave of high-impact economic events and central bank decisions that could shape currency trends and broader risk sentiment. Attention will center on key employment data from New Zealand, the U.S., and Canada, as well as interest rate decisions from the Federal Reserve and Bank of England. While the Fed is expected to hold steady, the BoE is widely anticipated to deliver a rate cut in response to slowing growth and elevated trade uncertainty. Meanwhile, the Bank of Japan has adopted a cautious stance, leaving rates unchanged and downgrading its economic outlook. In this environment, GBPJPY has entered a bullish phase, with technical momentum favoring further upside, though geopolitical risks and central bank commentary could test investor conviction.
Key Economic Events
Wednesday 01:45 am (GMT+3) – New Zealand: Employment Change q/q (NZD)
Wednesday 21:00 (GMT+3) – USA: Federal Funds Rate (USD)
Thursday 14:00 (GMT+3) – UK: Official Bank Rate (GBP)
Thursday 15:30 (GMT+3) – USA: Unemployment Claims (USD)
Friday 17:30 (GMT+3) – Canada: Employment Change (CAD)
Technical Analysis
Since establishing a higher trough at 187.452—well above the prior low of 184.359—GBPJPY has shifted into an upward trajectory, confirming the exhaustion of bearish momentum and the emergence of a new bullish phase. The subsequent breakout above the 189.610 swing high further validates the reversal and signals a clear change in market structure.
From a technical perspective, price action remains supported above both the 20- and 50-period EMAs, underscoring ongoing buying interest. However, with the 20-EMA yet to cross above the 50-EMA, the bullish outlook warrants cautious optimism. Momentum indicators continue to favor the upside: the Momentum Oscillator holds above the 100 line, and the RSI remains comfortably above the 50 threshold, reinforcing the prevailing bullish bias.
Potential Upside Targets
Should the bulls maintain market control, traders may direct their attention toward the four potential resistance levels below:
191.961: The first price target is observed at 191.691, representing the weekly Pivot Point, PP, estimated using the standard methodology.
193.737: The next price objective is seen at 193.737, as determined by the peak formed on May 2.
195.958: Similarly, the third target is projected at 195.958, which corresponds to the peak of March 27.
197.341: An additional price target is estimated at 197.341, representing the 423.6% Fibonacci Extension drawn from 191.707 to 189.966.
Potential Downside Targets
If the sellers manage to take control of the market, then traders may consider the following targets:
189.610: The first price target is observed at 189.610, representing a peak from April 16.
187.452: The next price objective can be estimated using the trough formed on April 22.
186.413: The third target is 186.413, calculated at the weekly support, S3, utilizing the standard Pivot Points methodology.
184.359: An additional downward target is observed at 184.359, corresponding to the trough from April 9.
Fundamentals
The Bank of England is widely expected to cut interest rates by 0.25 percentage points to 4.25% this week as economic forecasts weaken amid rising global trade tensions and Donald Trump's new tariffs. Economists anticipate further cuts through the year, possibly bringing rates to 3.75% by early 2026. While inflation remains slightly above target, slowing growth and heightened uncertainty are prompting policymakers to ease borrowing costs, which could lead to further declines in mortgage rates.
On the other hand, the Bank of Japan kept interest rates unchanged and sharply lowered its growth forecasts, citing mounting uncertainty from U.S. tariffs and weaker global demand. While the central bank still expects inflation to gradually reach its 2% target by late fiscal 2026, Governor Kazuo Ueda acknowledged that progress has been delayed. The BOJ now sees Japan's economy growing just 0.5% in fiscal 2026, down from earlier projections. Ueda emphasized a flexible policy approach amid rising stagflation risks, signaling that rate hikes remain on the table but are unlikely in the near term.
Conclusion
As central banks weigh policy responses to rising tariffs and slowing global growth, market participants are navigating a complex mix of signals. While the Fed is likely to hold steady, the Bank of England appears poised to ease, and the Bank of Japan is signaling patience amid downgraded forecasts. Meanwhile, GBPJPY technicals reflect growing bullish sentiment, supported by momentum but tempered by caution ahead of key macro releases. With employment data and rate decisions set to unfold, traders should stay nimble as policy shifts and economic surprises could quickly reshape market direction.