GBP/JPY Price Analysis: Aims to shift auction above 162.00 ahead of BoE policy

The GBP/JPY pair has gradually inched back to near the 162.00 resistance in the early European session. The cross is likely to possess an upside bias ahead of the monetary policy announcement by the Bank of England (BoE). Thursday’s BoE policy is likely to be concluded with a 25 basis point (bp) rate hike despite fears of a banking fiasco and a dismal economic outlook.

But before that, the United Kingdom inflation data will remain in focus. The street is anticipating a decline in the annual headline Consumer Price Index (CPI) to 9.8% from the former release of 10.1%. While the core CPI that excludes oil and food prices would remain steady at 5.8%. A higher inflation rate might bolster the odds of a 25 bps rate hike announcement from BoE Governor Andrew Bailey.

Meanwhile, the Japanese economy is focusing on providing relief to households as they are struggling to offset inflated prices of goods and services.

GBP/JPY is aiming to deliver a breakout of the Inverted Head and Shoulder chart pattern formed on an hourly scale. The neckline of the Inverted H&S chart pattern is plotted from March 17 high at 162.19. A breakout of the aforementioned chart pattern will result in wider ticks and heavy volume towards the north.

The 20-period Exponential Moving Average (EMA) at 161.77 is providing cushion to the Pound Sterling bulls.

Meanwhile, the Relative Strength Index (RSI) (14) is struggling to shift into the bullish range of 60.00-80.00. An occurrence of the same would activate the bullish momentum.

Going forward, a decisive break above March 17 high at 162.19 would drive the cross toward March 08 high around 163.00 followed by the horizontal resistance plotted from March 10 high at 164.24.

On the flip side, a break below March 21 low at 160.76 would drag the asset toward March 17 low at 160.16. A breach of the latter would drag the cross toward March 20 low around 159.00.

GBP/JPY hourly chart