GBP/JPY Forecast – British Pound Continues to Find Strength Against Yen

GBP/JPY Forecast Video for 25.04.23

British Pound vs Japanese Yen Technical Analysis

The British pound has rallied a bit during the trading session on Monday, as we broke above the top of the hammer from the Friday session. At this point, it looks like the British pound is threatening the ¥168 level, and then possibly even the ¥169 level. If we can get past all of that, it becomes more or less a “buy-and-hold signal” in this pair, as it would be a major breach of resistance.

In the meantime, short-term pullbacks should be buying opportunities, and therefore it’s likely that we continue to see a lot of value hunting on these short-term moves. On the other hand, if we were to break down below the hammer from the trading session on Friday, then it opens up the possibility of a move down to the 50-Day EMA, near the ¥164 level. That being said, I think a lot of this comes down to the interest rate differential, especially as the Bank of Japan has continued its quantitative easing policy, keeping the 10 year JGB down to 50 basis points or less. At the same time, the Bank of England has been tightening rates.

Ultimately, this is a market that’s been in an uptrend for quite some time, and we have taken out the losses from the day that the Bank of Japan allowed the 10 year yield to rise from 25 basis points to 50, and as a result this “round-trip” move shows just how strong the British pound is, or perhaps in this case – just how weak the Japanese yen is. Either way, the upward momentum is very strong, and you cannot fight it. I do believe that we will get the occasional short-term pullback, but this should be looked at as potential buying opportunities and value in the British pound.

I have no interest in buying the Japanese yen, at least not against this currency, and in general I do think that the Japanese yen has peaked a couple of months ago, and now we are in the process of going back to the original trend as the Bank of Japan can either keep interest rates low by printing currency, or deal with the consequences of high interest rates and defend the value of the currency, but cannot do both.

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