For years, the pound was in rallying mode against the Japanese Yen. This Bull Run ended in August 2015 when the pair reached a high of 195.01. After that, the pair has been in a decline, which accelerated in mid-2016 when Brexit vote passed.

The currency pair found a floor in October 2016 when it settled at 123.01. Since then, the pair has been struggling to recoup some of its losses. Already, the pair has managed to recover some of those losses but the upward journey remains challenging. In the past year, the pair has had a 10% gain.

This week, the pair’s upward momentum seems to have hit a wall. The pair has fallen from 156.6 to touch a monthly low of 151.19. This point provides an important support for the pair as shown in the chart below.

Today, with no major economic data expected, the movements of the pair will be determined by politics and commentary on tomorrow’s interest rate decision by the Bank of England.

From the political side, the UK is in interesting times where the Prime Minister faces challenges with her cabinet. Yesterday, it was reported that the EU would be able to punish the UK at will during the transition period.

Today, the MPC starts its first meeting, which comes at a time when volatility is increasing. Traders will wait to get guidance on what to expect throughout the year from the BoE.

As shown, traders should watch out for the 151.15 level, which provides important support. If the pair breaches this area, it may test the psychologically important level of 150.

(Click on image to enlarge)