GBP/JPY sits near weekly tops, bulls await a sustained move beyond 139.00 mark

• GBP/JPY gains traction for the second consecutive session on Thursday.
• Not so dovish BoE statement provided a modest lift to the British pound.
• The risk-on mood undermined the safe-haven JPY and remained supportive.

The GBP/JPY cross refreshed daily tops post-BoE announcement, with bulls now looking to build on the momentum further beyond the 139.00 round-figure mark.

Following the previous day's intraday pullback of around 50 pips, the cross managed to regain some positive traction on Thursday and spiked to the top end of its weekly trading range. The uptick was supported by a modest pickup the British pound after the Bank of England (BoE) offered a glimpse of optimism at the end of the latest monetary policy meeting.

As was widely expected, the UK central bank held interest rates steady at 0.1% and maintained its existing level of Asset Purchase Facility at £745 billion. In the accompanying policy statement, the BoE said the recession will be less severe than feared and predicted that the economic output will shrink by 9.5% this year as against the 14.5% estimated previously.

The BoE, however, warned that unemployment could almost double to 7.5% by the end of 2020 and the risks to the outlook remain skewed to the downside. It reiterated that it will continue to monitor the situation and stands ready to adjust monetary policy accordingly. Meanwhile, there was no specific mention of pursuing negative interest rates moving forward.

Apart from this, the upbeat market mood – as depicted by the bullish trading sentiment surrounding the global equity markets – undermined the Japanese yen's relative safe-haven demand against its British counterpart. This, in turn, remained supportive of the GBP/JPY pair's bid tone through the first half of the trading action on Thursday.

It will now be interesting to see if the cross is able to capitalize on the momentum or continues with its struggle to decisively break through the 139.00 mark. The focus now shifts to the post-meeting press conference, where comments by the BoE Governor Andrew Bailey might infuse some volatility around the GBP crosses and produce some meaningful trading opportunities.

Technical levels to watch