GBP/JPY Forecast Video for 22.02.23

British Pound vs Japanese Yen Technical Analysis

The British pound has taken off against the Japanese yen during trading on Tuesday, breaking above the crucial ¥162.50 level. We had been bouncing around for a while, and trying to figure out whether or not we can break that area. We finally got our answer on Tuesday, and now it looks as if this market is going to do everything it can to take off to the upside. Ultimately, this is a market that is probably reacting to PMI numbers coming out of the United Kingdom, as a finally gave it an excuse to rally. While they were great, they weren’t nearly as bad as people had anticipated.

It’s also worth noting that the Bank of Japan and its yield curve control continues to hamper the growth of the Japanese yen. After all, keeping the 10 year JGB down to 50 basis points will be an issue, and something that will cause a lot of pressure to be found against the Japanese yen as the Bank of Japan will have to print currency to buy those bonds. In other words, the market is simply flooded with Japanese yen at the moment, and it appears that the Bank of England is likely to remain rather hawkish in the meantime, as inflation and employment are both more resilient in the United Kingdom than originally thought.

When you look at the structural set up, we had been bouncing around and forming a bit of a bottoming pattern, and now it looks like we finally are ready to take advantage of it. It’s very likely that this market could go looking to the ¥165 level above, which is the next major barrier. We’d seen quite a bit of selling pressure in that area, so I think it does make certain amount of sense that we would try to see whether or not it holds on the way back up.

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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