GBP/JPY Forecast – British Pound Continues to See Noisy Behavior Against the Japanese Yen

GBP/JPY Forecast Video for 06.07.23

British Pound vs Japanese Yen Technical Analysis

The British pound has gone back and forth during the trading session on Wednesday, as we are starting to run out of momentum. All things being equal, this is a market that I think will eventually get to the ¥185 level, but it may take a bit of time to get there as the market has gotten itself a little overextended. Short-term pullbacks could open up buying opportunities near the ¥180 level. The ¥180 level is an area where there has been previous support, and of course it is a large, round, psychologically significant figure, so it does make a certain amount of sense that we would see that area offer support previously.

Looking at this chart, I do think that it remains a “buy on the dips” type of situation. If we can break above the ¥185 level, then it’s likely that the market could go racing higher, perhaps kicking off the next leg to the upside. Keep in mind that the Bank of Japan continues to do everything it can to keep monetary policy easy, and therefore the Japanese yen will continue to be punished as a result. All things being equal, I think we probably continue to go much higher, and as far as I can see, the 50-Day EMA would have to be broken to the downside to start thinking about a trend change. Quite frankly, we would need to see the Bank of Japan change its overall monetary policy stance, or perhaps the Federal Reserve do the same. The interest rate differential is wide enough to keep the trend intact, but the occasional pullback could very well appear as traders trying to take profit along the way.

It’s also possible that we simply go sideways for a while, in order to “work off the froth” of the big move. With that being the case, it’s worth being very cautious about getting overly aggressive, but I also recognize that we have a scenario where longer-term it’s probably only going to continue going higher. A little bit of patience might go a long way in this market.

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