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GBP/JPY Forecast – British Pound Continues to Pressure to The Upside Against the Japanese Yen

By:
Christopher Lewis
Updated: Apr 1, 2023, 19:59 UTC

The British pound has rallied significantly during the trading session on Friday to reach towards the crucial ¥165 level.

British Pound, FX Empire

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GBP/JPY Forecast Video for 03.04.23

British Pound vs Japanese Yen Technical Analysis

The British pound has rallied significantly during the trading session on Friday, reaching above the 1.65 level before pulling back just a bit. That being said, the market is likely to continue to see a lot of noisy behavior, as the Bank of Japan continues to see its yield curve control policy tested at times. The policy of keeping the 10 year yield at 50 basis points or less means that the Bank of Japan would have to print Japanese yen in order to keep interest rates down.

It’s worth noting that we have given back quite a bit of the momentum, and therefore it’s likely that we see some type of pullback. At this point, the market would more likely than not go looking back towards the moving averages, specifically the 50-Day EMA, possibly even the 200-Day EMA which sits right around the same area. Ultimately, the market has been in the range for a while, so it’ll be interesting to see how that plays out. It’s not until we break above the ¥166.50 level that I would think that this market is going to go much higher, perhaps even higher than that.

Keep in mind that this pair is highly sensitive to the risk appetite of the markets in general, and of course we have that yield curve control coming out of Tokyo that has a major influence on the Japanese yen. If interest rates rise, that means that the Japanese will have to print more yen in order to buy those bonds. At the same time, the market is likely to see a lot of volatility, and the Japanese yen strengthened if rates do drop. Needless to say, the market is likely to continue to see a lot of noisy behavior, and therefore the fact that we have seen such a huge move to the upside, analysis of the market is a little overbought. Therefore, I suspect that this market is going to pull back just a bit in the short term. However, if we do break out to the upside we would probably see the Japanese yen lose strength against multiple currencies, not just the British pound.

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

About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.

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