GBP/JPY rebounds from five-day lows, steadies around mid-151.00s

• GBP/JPY remains on track to close the second straight day lower.
• BoE and BoJ will hold policy meetings later in the week.

The GBP/JPY pair dropped to a five-day low of 150.79 on Tuesday but erased the majority of its daily losses in the second half of the day. As of writing, the pair was on track to close the second straight day in the negative territory, losing 0.12% on the day at 151.42.

Eyes on BoE and BoJ policy announcements

Nevertheless, the pair's recent action seems to be a partial correction of the latest uptrend, which lifted the price to its highest level since April 2018 at 152.26 on Friday. Investors may also be looking to book some profits before the Bank of England's and the Bank of Japan's policy meetings later in the week.

Meanwhile, the UK's FTSE closed with a strong daily gain of 0.8% on Tuesday and helped GBP/JPY reverse its direction.

Earlier in the day, Bank of England (BoE) Governor Andrew Bailey said that the BoE will continue its bond purchases in 2021. Regarding the inflation outlook, Bailey acknowledged that there could be a flare in inflation in the short-term due to support measures but noted that they don't expect it to surpass the 2% threshold.

There won't be any macroeconomic data releases from Japan on Wednesday and GBP/JPY is not expected to make a decisive move in either direction.

Technical levels to watch for