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

GBP/JPY Forecast Video for 31.07.23

British Pound vs Japanese Yen Technical Analysis

The British pound has rallied a bit during the trading session on Monday, breaking above the ¥182.50 level, an area that has been important more than once. By doing so, it looks like we are trying to do everything we can to break out, and therefore I think it’s probably only a matter of time before we continue to reach higher, perhaps a need for the ¥185 level. All things being equal, I think this is a market that continues to see more of a “buy on the dip” attitude, especially with inflation in the United Kingdom still racing higher.

The ¥180 level underneath is a large, round, psychologically significant figure, and an area where we have seen a lot of support. The Japanese have stepped into the bond market and started buying bonds again, thereby reentering quantitative easing, just a couple of days after trying to talk the market back down. With this, and the fact that we bounced from the 50-Day EMA, suggests that we are going to continue to go higher. In general, this is a situation where we continue to see plenty of value hunting, and therefore I think you’ve got a scenario where eventually we do break out above the ¥185 level, which opens up the possibility of going much higher, perhaps as high as the ¥200 level.

On the other hand, if we turn around and break down below the bottom of the Friday candlestick, then I think we see the market reaching down to the ¥175 level. The ¥175 level being broken then would very likely turn the entire market around. I just don’t see that happening anytime soon though, so I think any time we drop, there will be plenty of value hunters willing to step into this market. This will be especially true as the Japanese are essentially trapped, because they are so indebted that they cannot afford higher interest rates, and the market knows this. It is possible that the market is building up the momentum for the next leg higher, which could be a pretty big one, given the way that it has behaved in the recent past.

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