British Pound Very Noisy Against Yen to Kickoff Week

The British pound has gone back and forth against the Japanese yen during the trading session on Monday, as we continue to pay close attention to geopolitical issues, as well as potential inflationary issues. The British pound has been stronger against the Japanese yen over the longer term, due to the fact that the Bank of England is looking very likely to continue tightening monetary policy, while the Bank of Japan will simply do anything it can to keep monetary policy as loose as possible. Because of this, it makes quite a bit of sense that the interest rate differential continues to favor the upside.

GBP/JPY Video 22.02.22

However, the world right now is a very dangerous place, and therefore it does make a certain amount of sense that we would see some type of run towards safety with the geopolitical concerns that the Ukrainian border, and of course a lot of concerns when it comes to global economic issues. All things been equal, the market does favor the upside over the longer term, but do not be surprised if the market pulls back occasionally due to the headlines around the world.

With that in mind, you need to keep your position size reasonable and of course make sure that you have your stop losses in place due to the fact that a sudden announcement or news blurb could send the market racing in one direction or the other. All things being equal, this is a market that will continue to be noisy, but I still favor the upside as things stand right now. The ¥155 level should be a significant support level, while the ¥158 level continues to be resistance.

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