GBP/JPY Forecast – British Pound Can’t Quite Break Out Yet

GBP/JPY Forecast Video for 30.01.23

British Pound vs Japanese Yen Technical Analysis

The British pound has pulled back a bit during the trading session on Friday, showing that the ¥162 level continues to be rather resistant. Looking at the chart, you can see that we are in an area that has been important multiple times, and you can make an argument for potential “W better.” However, we have not been able to break above the resistance, which also sits right at the moving averages, the 50-Day EMA and the 200-Day EMA.

If we do break above is moving averages, and perhaps even the last vestiges of resistance at ¥162.50, then it opens up a move to the ¥165 level. Ultimately, I think this is a market that will continue to chop around until we get a bit of clarity. However, I would pay close attention to the candlestick on Wednesday, because if we were to break down below the bottom of that hammer, we will more likely than not drop rather precipitously. We won’t necessarily punch to the bottom of the potential W pattern, but it would change the dynamics quite drastically.

Keep in mind that this pair is highly sensitive to risk appetite, and of course the yield curve control that the Japanese are currently involved in. They are trying to keep interest rates down to 50 basis points in the 10 year JGB, so they are printing a lot of yen to make sure that doesn’t happen every time bond yields start to rise around the world, as it has a knock on effect in Japan as well.

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