British Pound Continues to Show Strength Against Yen

The British pound has initially fallen rather hard against the Japanese yen during trading on Friday, but then turned around to show a remarkable recovery and further cemented the idea of strength. Because of this, I think that the market is still going to try to go towards the highs, mainly based upon the Bank of England and its sudden change of heart when it comes to tightening.

GBP/JPY Video 07.02.22

The ¥155 level underneath should be support, based upon historical and psychological reasoning. With that being the case, I think the market probably sees that as a bit of a “floor”, and that might have been part of the reason we recovered the way we did. With that in the back of our minds, I am using that as a signal of strength or weakness. The fact that we bounced as high as we did from there is a good sign obviously, but we have some work to do.

The ¥157.50 region is significant resistance, and it could be the target eventually, but we have gotten a little bit parabolic at this point in time and I do anticipate a little bit of back and forth in order to build up the necessary momentum if we do in fact make that move. The market will continue to be very noisy to say the least, but you should also keep in the back of your mind that the British pound/Japanese yen currency pair is highly dependent on risk appetite behavior. If we do in fact see risk appetite fall, that could be something to bring this market right back down.

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