GBP/JPY Forecast – British Pound Falls to Test Major Moving Averages

GBP/JPY Forecast Video for 10.03.23

British Pound vs Japanese Yen Technical Analysis

The British pound has fallen a bit against the Japanese yen during trading on Thursday, as we continue to see a little bit of noise in this market. We are currently testing the 50-Day EMA indicator, right along with the 200-Day EMA indicator both of these indicators are obviously widely followed, so it does make a certain amount of sense that we have a bit of hesitation here. Furthermore, this is an area that had previously been resistance, so it does make a lot of sense that there might be a little bit of support or buying pressure underneath.

Keep in mind that the Bank of Japan continues to do its yield curve control policy, keeping the 10 year yield to 50 basis points or lower. In other words, every time the bond market sells off, they have to come in and buy Japanese bonds. In order to do that, they have to print more Japanese yen, thereby flooding the currency market with supply. In that environment, it’s very difficult to imagine a scenario where the Japanese yen strengthened significantly, but if bond markets start to give a bit of a reprieve to yields worldwide, that could have a bit of a “knock on effect” over here as well.

Another thing to keep in mind is that the pair does tend to be highly sensitive to risk appetite, so pay close attention to what the rest of the world is doing. If it is more of a “risk off” type of day, that can send this pair lower, just as a lot of risk taking can send it higher. The United Kingdom is struggling with its own issues, so therefore the British pound for the most part has been a bit of a laggard when it comes to Japanese yen related pairs. However, they all do tend to move in the same direction overall, so I still think that more likely than not you will have buyers stepping into this market to take advantage of cheap British pounds against a currency that has so much working against it at the moment.

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