GBP/JPY Forecast – British Pound Bounces Against Yen

GBP/JPY Forecast Video for 31.10.23

British Pound vs Japanese Yen Technical Analysis

The British pound has rallied again during the trading session on Monday, as we continue to see the bottom of the consolidation area hold. This is a market that not only has support near the ¥182 level, but it also has even more support at the ¥180 level, an area that has proven itself to be important more than once. Just above, we have the 50-Day EMA coming into the picture, which of course offers a certain amount of technical resistance. A move above there then opens up a move to the ¥183.50 level.

All things being equal, this is a market that looks as if it is trying to consolidate and work off a bit of froth from the longer-term move higher. The Bank of Japan of course figures to be a major factor in this market, and with its interest-rate decision this year, we could see a lot of volatility. Traders are wondering whether not the Bank of Japan is finally going to do something to protect its currency, or if it will continue to be very loose with its monetary policy. It cannot have both, so it will be interesting to see how this plays out. I do think that there is a lot of noise out there just waiting to happen, so I think you need to be very cautious with your position sizing.

Eventually, I do think that this market takes off to the upside, unless of course Japan suddenly changes its overall attitude, but I just don’t see that happening for more than a short-term cycle. That being said, if we do break down below the latest swing low from 3 or 4 weeks ago, the market could start racing toward the 200-Day EMA, an indicator that obviously will attract a lot of attention from technical traders in general.

Position sizing is going to be very crucial, so therefore you need to be cautious as this pair is highly sensitive to risk appetite, and of course that central-bank announcement coming out of Tokyo this week. All things being equal, I do favor the upside but the next couple of days could be rather noisy to say the least.

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