Global macro overview for 16/12/2016:
The Bank of England monetary policy decision did not surprise market participants. BoE has decided to leave the interest rate at the level of 0.25% and asset purchase facility at the level of 425bln. The official bank rate votes did not change as well and the votes were divided just last month: 0-0-9. In the monetary policy summary, the rate-setting Committee said the British Pound advance could mean "less of an overshoot" above its 2% goal than previously predicted. Nevertheless, MPC still sees a pickup in price growth and repeated its line that it has limited tolerance for exceeding its target. Moreover, MPC also noted that the economy might cool down in 2017 as the consumer spending is declining and the vote to leave the European Union is still unknown for most of the investment plans.
Let's now take a look at the GBP/JPY technical picture in the daily time frame. The shooting star candlestick pattern might suggest the temporary top is in place and the market could decline towards the next support at the level of 143.21. In order to do this, bears would have to break out below the intraday support at the level of 146.02 first and then head lower. The bearish divergence between the price and momentum oscillator supports this view.
