GBP/JPY Forecast – British Pound Continues to Consolidate Against Yen

GBP/JPY Forecast Video for 13.09.23

British Pound vs Japanese Yen Technical Analysis

The British pound has gone back and forth during the course of the trading session on Tuesday as we continue to dance around the 50-Day EMA. Keep in mind this pair is highly sensitive to risk appetite, and of course over the weekend we had the Bank of Japan Gov. Ureda jawboning the currency markets as he was suggesting that perhaps the Bank of Japan could have positive real rates at the end of the year if employment continues the way it has. With that being said, we now have a little bit of a micro double top between the Monday and Tuesday candlestick, so we can break above those, I do believe that this market is looking to the ¥185 level.

Ultimately, this is a market that I think is killing time and trying to determine where it’s going next, which could be driven by risk appetite overall. After all, the interest rate differential favors the British pound, so you do get the positive rate of carry at the end of the day, and therefore you get paid to hold this market. That has been a major driver for a while, but it looks like the ¥185 level is very difficult to get above. If and when that happens, it could very well open up the possibility of a move to the ¥200 level.

If we were to turn around and break down below the 50-Day EMA, then it’s possible that we could drop down to the ¥180 level, an area that I think is significant support, and therefore I think if we were to break down below that level, then it’s likely that we would see a huge turn of events. If that were to happen, then it’s possible that the Japanese yen would not only strengthen against the British pound, but probably most other currencies as well. That being said, the Japanese carry far too much debt to let rates strengthen too much, so therefore I think you continue to see this market go much higher over the longer-term and therefore I think each dip in the market offers potential value that people are willing to take advantage of.

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