GBP/JPY Forecast – British Pound Bounces Against the Yen

GBP/JPY Forecast Video for 05.10.23

British Pound vs Japanese Yen Technical Analysis

The British pound has rallied during the trading session on Wednesday, as it continues to recover against the Bank of Japan intervention on Tuesday. The ¥180 level continues to be an area of significant importance, and the fact that we are bouncing from there should not be a huge surprise. If we turn around and break below there, the bottom of the candlestick from the Tuesday session suddenly becomes very important, because if we break down below there, it’s likely that we go down to the 200-Day MA.

The 50-Day EMA above offers resistance, and if we can break that level, then we go look into the ¥185 level. Keep in mind this pair is going to continue to be very noisy and difficult at times, and it does make a certain amount of sense that we would see volatility continue to be a major problem. After all, this pair is typically volatile to say the least, and of course we have recently seen interest rates swallow everything.

The United Kingdom seems like it’s going to struggle due to the underlying economic issues in that country, and of course the fact that the European Union is getting ready to struggle might drag the UK down with it. Because of this, the British pound has been a little less bullish against the Japanese yen than other currencies, and therefore it’s not as high up on my list of bullish pairs. Nonetheless, the Bank of Japan will continue to have to struggle with the idea of yield curve control, so I do think that ultimately this market does go higher.

If we were to break down below the bottom of the candlestick for the trading session on Tuesday, that would obviously be very negative, but right now it doesn’t look like we are ready to do that. In fact, I would not be surprised at all that the market were to go sideways between now and Friday, as we continue to see a lot of people in the markets try to get away from risk, and perhaps close out positions.

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