GBP/JPY Forecast – British Pound Continues to Chop Back and Forth

GBP/JPY Forecast Video for 06.03.23

British Pound vs Japanese Yen Technical Analysis

The British pound has gone back and forth during the trading session on Friday as we see a lot of noise out there. Keep in mind that this pair is highly sensitive to the risk appetite of the world, which sees a lot of fluctuation at the moment. The shooting star from the impulsive move on Tuesday to break above the ¥165 level was rather impressive, but we have turned right back around to show signs of exhaustion. With that being the case, the market is likely to continue to see a pullback at this point, but the question is whether or not that pullback will be anything of substance?

The 200-Day EMA sits right around the ¥162 level, with the 50-Day EMA getting ready to reach above it, perhaps kicking off the so-called “golden cross.” That being said, I don’t necessarily think that the market is one that you can easily discern at the moment, but it’s obvious to me that the Japanese yen is a little oversold in the short term, so I think at this point it does make a certain amount of sense that the yen picks up a bit of strength. Whether or not it can break down below the ¥161.50 level, that remains to be seen. If it does, that would obviously be a very negative turn of events. However, if that area offers a bit of support, then we could turn around and try to reach towards a ¥165 level.

All things being equal, the market is likely to see volatility, so therefore you need to be very cautious with the position sizing, as it gives you a little bit of leeway when it comes to the potential volatile moves that we will see. As we head into the weekend, it’s obvious that we are not ready to breakout to the upside quite yet, so it’ll be interesting to see what the next couple of days give us. Ultimately, I do favor the upside still, but I also recognize that we are not quite ready to go to the upside quite yet. With this, caution is the better part of valor.

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