British Pound Continues Choppy Behavior Against Yen

The British pound has rallied a bit during the course of the trading session again on Wednesday, but we continue to see a lot of noise just above. The market is in the midst of a consolidation area, and that of course will come into the picture as a bit of a barrier for continued movement. The ¥155 level underneath would offer a significant amount of support, not only based upon previous action, but the fact that the 50 day EMA is sitting in that same general vicinity as well.

GBP/JPY Video 24.02.22

On the other hand, the ¥158 level above offers resistance, so if we can break above there, it would be a big deal, perhaps sending this pair towards the ¥160 level. Ultimately, on pullbacks I think it remains a buying opportunity, mainly due to the interest rate differential play. In other words, the carry trade has been what we have been seeing come back into vogue as of late, and I think that will continue to be the case as long as the Bank of Japan keeps its monetary policy ultra-loose, while the Bank of England continues to look more hawkish.

Even if we did break down below the ¥155 level, I believe that the ¥153.50 level is going to be a major support level and an area where we had bounced from there previously. All things been equal, this is a market that continues to see a lot of choppy volatility, so please keep that in mind and perhaps treat this more or less as a range bound market with an upward bias.

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