GBP/JPY Forecast – British Pound Bounces From 50-Day EMA

GBP/JPY Forecast Video for 20.09.23

British Pound vs Japanese Yen Technical Analysis

The British pound has bounced from the 50-Day EMA during the trading session on Tuesday, as it looks like we are continuing to try to figure out where to go next. Ultimately, the Bank of Japan has an interest rate meeting on Friday that a lot of people will be paying attention to, so therefore it’s worth noting that this pair may be volatile. Furthermore, we have to ask questions about risk appetite and where that’s going, as the markets are trying to figure out what to do about interest rate decisions, and of course inflation itself.

All things being equal, this is probably more about the Japanese yen than anything else, so I don’t necessarily pay too much attention to Britain in this equation, at least not this week. If the Bank of Japan can somehow scare the market back down, then it’s possible that the Japanese yen could start to strengthen. However, I’m not holding my breath for this and I recognize that the markets will continue to look at the interest rate differential overall, as it is wide enough to drive a tractor at the moment.

Japan has a major issue, because it has massive amounts of debt that has to deal with, and therefore interest rates are particularly brutal on the Japanese. With that being said, I’m very cautious about getting excited about owning the yen, as I think that this is a longer-term structural problem that Japan has to deal with. In other words, all of that massive debt that the Japanese have taken out is going to continue to cause major issues.

That being said, I think that the ¥185 level above is crucial to pay attention to, and therefore if we can break above that level I think we probably have a situation where the market could really take off. If we break down below the 50-Day EMA, then we could be looking at a move down to the ¥180 level underneath which is a major support level on longer-term charts as well. In general, I anticipate the next couple of days may be noisy, but we may have more clarity after the Friday Bank of Japan press conference.

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