GBP/JPY Forecast – British Pound Bounces From Extreme Lows

Christopher Lewis
Published: Feb 3, 2023, 16:18 UTC

The British pound has bounced from extreme lows against the Japanese yen during trading on Friday as we have reached major support.

British Pound, FX Empire

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GBP/JPY Forecast Video for 06.02.23

British Pound vs Japanese Yen Technical Analysis

The British pound has initially fallen during the Friday session, but then turned around to show signs of life again as we are near the bottom of a major consolidation area. At this point, it’s obvious that the market is trying to recover its overly negative behavior as of late, and I think at this point it’s likely that this bounce could continue as interest rates are rising around the world. This of course works against the Bank of Japan and everything that it’s trying to accomplish. Because of this, it’s likely to be a situation where the higher interest rates will continue to work against the value of the yen as they continue to throw money at the bond market. In other words, they are printing yen.

Nonetheless, I think this is a situation where you have to look at this through the prism of back-and-forth choppy range bound behavior, with the top of it being near the ¥161.50 level, and of course the moving averages in that same neighborhood. With that being the case, I think we’ve got a situation where the traders out there will continue to look at this as a back-and-forth market, until we get some type of definitive action.

Expect more volatility, not less, as the traders around the world continue to see a lot of questions when it comes to growth, and of course monetary policy in general. I expect to see more of this nasty volatility for the foreseeable future, and therefore you need to be cautious with your position size. With that being said, I expect a lot of bouncing around in this same rectangle in the near term.

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

About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.

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