GBP/JPY Forecast – British Pound Bounces From Crucial ¥180 Level

GBP/JPY Forecast Video for 14.07.23

British Pound vs Japanese Yen Technical Analysis

The British pound has bounced a bit from the ¥180 level, which is an area of concern. After all, it is a large, round, psychologically significant figure, and an area where we have seen support previously. Because of this, I think it makes quite a bit of sense that we have rallied, and of course we have the interest rate differential between the Bank of England and of course the Bank of Japan. As long as the Bank of Japan continues to keep interest rates very low, and of course fight with yield curve control, the Japanese yen will be susceptible to pressure.

The British economy continues to face major inflationary pressures, suggesting that the Bank of England will continue to have to be aggressive in its interest rate hiking cycle. If that’s going to be the case, it makes the British pound much more attractive. The swap that you get paid at the end of the day also comes into play, and of course longer-term investors prefer to take the approach of buying the higher-yielding currency so that they can get that similar action to a dividend stock.

Even if we do break lower from here, the 50-Day EMA comes into the picture near the ¥177 level and is rising. That should offer a bit of support, and therefore I think that this still remains a bit of a “buy on the dip” situation. On the other hand, if we simply take off to the upside I think we are eventually going to threaten the ¥185 level, an area that is a large, round, psychologically significant figure, and was the target previously that we failed to reach.

After all, even though we have pulled back quite a bit over the last week or so, the reality is we are still very much in an uptrend in that remains the case. I have no interest in fighting the trend, and look at moves like this as being much more indicative of what we have seen over the longer term. Until the fundamental situation changes, this is a market that I’m looking to only go long in.

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