GBP/JPY Forecast – British Pound Continues to Threaten Yen

GBP/JPY Forecast Video for 14.11.23

British Pound vs Japanese Yen Technical Analysis

The British pound has rallied during the trading session on Monday, reaching the top of the short-term consolidation region that we have been in. With this being the case, the market is likely to continue seeing more of a “buy on the dip” attitude as the interest rate differential between the 2 economies and currencies is big enough to warrant the “carry trade.” This involves getting paid at the end of every session, and therefore it makes it an attractive investment.

The 185 Yen level is an area that a lot of people will be paying close attention to, as the area is not only a large, round, psychologically significant figure, but it is also an area where we’ve seen a lot of action in the past. Because of this, I think you got a situation where value hunters will return, and I just don’t see how you could be a seller of this market anytime soon. Even if we were to break down below the ¥185 level, the 50-Day EMA comes into the picture near ¥183.50, and therefore it’s difficult to imagine a scenario where we suddenly slice through all that.

On the upside, if we can take out the ¥187 level, that should send this market screaming higher, perhaps reaching the ¥190 level before it is all said and done. That would make a certain amount of sense, as we continue to see a lot of inflation out there, keeping interest rates higher at most central banks, with the exception of course of Japan. As long as that’s the case, you get paid to hold this pair, so I believe that every time it pulls back there will be buyers willing to step in and take advantage of “cheap British pounds.”

As the Bank of Japan is nowhere near tightening monetary policy, the one that could throw a monkey wrench into the entire situation would be if the British decide to cut back on quantitative tightening. If that were to be the case, then we could see the market drop significantly but at this point the Japanese yen is at the mercy of other central banks around the world.

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