GBP/JPY Forecast – British Pound Continues to Stretch Higher Against Yen

GBP/JPY Forecast Video for 18.05.23

British Pound vs Japanese Yen Technical Analysis

The British pound has rallied a bit during the trading session on Wednesday, as we continue see overall bullish pressure in this market. That being said, there is a significant amount of resistance just above and the market will have a lot to deal with to get above it. If we can, then the market more likely than not will reach toward the ¥172.50 level, which was the most recent swing high. Anything above there then allows the market to become more of a “buy-and-hold” situation that will probably go looking toward the ¥175 level.

On short-term pullbacks, I still like the idea of buying this pair as it has been so bullish for so long. Ultimately, the market will have to try to find some type of value, and it certainly looks as if the market has plenty of support all the way down to at least the ¥167.50 level, but after that we also have the 50-Day EMA just below there that is rising rather rapidly, offering a little bit of technical support as well. Finally, we have the ¥165 level, which is where the trend is probably going to be decided. Anything underneath there could change a lot of things but you would see that throughout the Japanese yen currency pairs, not just this one.

As long as the Bank of Japan continues to practice yield curve control, it’s almost impossible for the Japanese yen to have any success strengthening against other currencies for a longer-term move. Because of this, it continues to be a “buy on the dip” market, and probably will be for the foreseeable future. If you squint, you can make out a bullish flag, although it’s not necessarily the best shape, but clearly after that impulsive candlestick 2 weeks ago there are still quite a few buyers in this area trying to get involved.

Keep your position size reasonable, but this still looks like it’s a one-way trade given enough time. I do anticipate that the area near ¥172.50 is going to be difficult to break through, but the market is obviously building up a lot of pressure to at least attempt to do so.

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