The GBP/USD pair traded 0.2% lower near 1.3400 during the late Asian session on Friday, facing selling pressure as the US Dollar Index rebounded 0.3% to 99.45 after a sharp decline the previous day [1]. The US Dollar was the strongest against the Japanese Yen, with a 0.44% gain, while the Pound Sterling had gained sharply on Thursday following the Bank of England's decision to hold interest rates steady at 3.75% with a unanimous vote from all Monetary Policy Committee members [1]. Traders expect the BoE to deliver two 25 basis points hikes this year, as UK inflation is unlikely to return to the 2% target soon amid higher energy prices [1]. Technical analysis shows GBP/USD struggling to extend gains above the 38.2% Fibonacci retracement at 1.3467, with near-term bias mildly bullish as the pair attempts to settle above the 20-day Exponential Moving Average just above 1.3400 [1].
Meanwhile, the AUD/JPY cross attracted buyers to near 112.20 during the early European session on Friday, supported by a hawkish tone from the Reserve Bank of Australia. The RBA raised its Official Cash Rate by 25 basis points to 4.10% at its March meeting, marking the second consecutive hike this year after a similar increase in February [2]. RBA Governor Michele Bullock cited persistent high prices and concerns about second-round effects from higher energy costs, which have been triggered by the ongoing conflict in the Middle East [2]. Technical analysis indicates a bullish bias for AUD/JPY, with price extending above the rising 100-day EMA near 106.60 and holding in the upper half of the Bollinger Band envelope. RSI at 57.00 suggests positive momentum, favoring trend continuation. Immediate support is at 111.58, with resistance at 113.65 and 114.00 [2].
Both articles highlight the impact of Middle East tensions on global energy prices and central bank policy decisions. The US Dollar rebounded as central banks signaled that rate cuts are off the table due to upside inflation risks, while the Japanese Yen remains a potential safe-haven asset amid escalating US-Israeli conflict with Iran [1][2]. Iranian Foreign Minister Abbas Araghchi threatened "ZERO restraint" if the country's energy infrastructure were attacked again [2].
Market reactions have been mixed: GBP/USD faces resistance and mild bullish bias, while AUD/JPY shows sustained upside momentum. Forward-looking statements include expectations for further BoE rate hikes and continued bullish technical structure for AUD/JPY as long as daily closes remain above key support levels [1][2].
CONCLUSION
Central bank decisions and geopolitical tensions are driving currency market volatility, with GBP/USD facing resistance and mild bullish bias, and AUD/JPY maintaining a bullish uptrend. Traders anticipate further rate hikes from the Bank of England and continued strength in the Australian Dollar, while safe-haven flows into the Yen may increase if Middle East tensions escalate. The overall market impact is medium, with inflation and energy prices remaining key concerns.