British Pound Continues Volatile Ride Lower

The British pound has initially tried to rally during the trading session on Tuesday but has given back gains rather significantly to plunge towards the ¥153.50 level, an area that has been supportive more than once. By doing so, it suggests that the market is going to continue to struggle for clarity going forward because quite frankly it is such a congested area. Breaking down below there could open up the possibility of a move towards the ¥152.50 level, but I do not necessarily think that we have enough clarity to say that for sure at the moment. Quite frankly, the market is moving on real emotion at this point in time.

GBP/JPY Video 02.03.22

The 200 day EMA sits just above the ¥152 level, so it is worth noting that it could be a major floor in the market. It is also worth noting that the 50 day EMA sits just above the current resistance at ¥155, meaning that we are essentially squeezing between the two major moving averages, looking for some type of bigger directionality. Whether or not we get that in the short term is completely questionable, but I certainly think that you have to look at rallies with a little bit of suspicion considering the risk appetite around the world seems to be waning.

If we were to break above the ¥155 level, it could open up a move to the ¥156.50 level, but this would obviously be a “risk-on move” in the markets. I do not know what would cause that other than good news coming out of Ukraine, but at this point almost anything is possible.

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