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GBP/JPY Forecast – British Pound Continues to Find Buyers on Dips Against Yen

GBP/JPY Forecast Video for 26.05.23

British Pound vs Japanese Yen Technical Analysis

The British pound has fallen initially against the Japanese yen during the trading session on Thursday, and it looks as if we are going to continue to see pressure to the upside and it looks like if we can break above the area here at the ¥172.50 level, it’s likely that we go looking for the ¥175 level after that. The ¥175 level of course is a large, round, psychologically significant figure, and therefore one would assume that there is going to be a certain amount of reaction to that region.

On the downside, I believe that the ¥170 level offers a lot of support, as it is a large, round, psychologically significant figure and an area that we see some action at in the past. For the short term trading situation, I believe that the ¥170 level underneath is a significant short-term “floor in the market.” The market will continue to see more of this “buy on the dip” mentality, therefore I think we’ve got a situation where you can only be long of this market, and shorting it is all but impossible.

Keep in mind that the interest rate differential between the 2 currencies is rather drastic, and that of course will drive a lot of money toward the British pound for the “carry trade” that is now back in vogue. It’s worth noting that we broke through the top of the most recent significant pullback, so now we are just simply building up the pressure to go to the outside.

Expect a lot of volatility, but that’s nothing new for this pair. The pair does tend to be very noisy and therefore you have to be cautious with your position sizing and recognize that you may have to ride out a significant amount of volatility. Nonetheless, I do think that we get to the ¥175 level sooner rather than later, therefore I look at this market as a lot like a beach ball being held under water, in the sense that once it breaks above the resistance, it will pop straight up in the air.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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