GBP/JPY Forecast – British Pound Continues to Find support against Japanese Yen

GBP/JPY Forecast Video for 06.10.23

British Pound vs Japanese Yen Technical Analysis

The British pound has fallen initially against the Japanese yen on Thursday, but continues to find plenty of support underneath keep the market somewhat afloat. Because of this, I think that the 180 level continues to be a major influence on the market, and therefore I would be cautious about getting overly bearish. This isn’t to say that we can’t break down, just that the market is likely to continue seeing this area as important.

The jobs number on Friday will probably have a lot to say about where we go next from a risk appetite standpoint, and of course this pair is highly sensitive to risk appetite so you need to be cautious about that. With that being the case, I think this is a scenario where if we break down below the massive candlestick on Tuesday, it could open up the floodgates and the British pound could go looking toward the ¥175 region. This is also where the 200-Day EMA is hanging around, so it all ties together quite nicely.

With that being said, the upside features the 50-Day EMA getting in the way, so that is something worth paying attention to as well. If we can break above that level, then it’s likely that we go looking toward the ¥185 level. Keep in mind that the British pound is a very sickly looking currency, but we also have the Japanese yen in this equation, and the fact that the Bank of Japan can do nothing to raise rates.

Ultimately, the interest rate differential still favors the United Kingdom, but there’s also the possibility that the UK will have to start cutting rates much quicker than other currencies due to the fact that the European Union is likely to head into a recession, and this of course can produce a bit of a “knock on effect” in the UK itself. With that being the case, I think that the British pound will continue to underperform many other currencies against the Japanese yen, but regardless, I have no interest whatsoever in shorting this market.

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