GBP/JPY attempts to return above 181.00 weighed by hopes of BoE cuts

• The Pound is trading near recent lows weighed by weak UK Inflation data.
• Investors are betting on BoE cuts in the first half of 2024.
• The dovish BoJ stance is cushioning the Pound's reversal.

The Pound is trading within a narrow range, with upside attempts capped below 181.00 so fast, as the soft inflation levels seen on Wednesday have boosted speculation of BoE cuts.

The sharp decline in UK consumer prices, with the yearly CPI declining below 4% for the first time in two years, surprised investors and has raised hopes that the Bank of England might start easing its monetary policy in May.

From a wider perspective, the pair has been trading in a mixed and volatile way over the last two weeks. This has resulted in a triangle formation, with trendline support, right above 180.00, holding the pair right now.

This pattern has a bias to break lower, with the next targets at 178.34 and 176.25, although the Bearish BoJ outlook is cushioning the GBP´s bearish attempts.

On the upside, the pair should breach 182.35 to test a major resistance area at 184.35

GBP/JPY 4-hour chart

Technical levels to watch