GBP/JPY Forecast – British Pound Finding Support

GBP/JPY Forecast Video for 05.05.23

British Pound vs Japanese Yen Technical Analysis

The British pound has pulled back a bit during the trading session on Thursday, as we continue to test the ¥169 level for support. This is an area that previously had been significant resistance, so it does make a certain amount of sense that “market memory” comes into the picture and offers buying pressure. Furthermore, interest rates around the world continue to be very hot, and it does make a certain amount of sense that we would continue to see the Japanese yen get pummeled due to the Bank of Japan and its yield curve control policy.

Ultimately, I think the market is trying to build up enough momentum to continue going higher, it just got a little overdone and therefore we needed to pull back to find more buyers. We are already starting to bounce right around this area, so it does make a certain amount of sense that we see the pair eventually turn around. However, this is a very sensitive pair when it comes to risk appetite, so therefore you need to be cautious with paying attention to sentiment indicators. You can also use the other markets out there to get an idea as to how risk appetite is going, as it is such a great barometer of where risk is going, depending on the market. For example, the S&P 500, bond markets, and other stock indices can give you an idea as to what investors are thinking.

If the market can break back above the ¥170 level, then it’s likely that we will go back toward the ¥172.00 area, perhaps even higher than that as it would become more or less a “buy-and-hold” market. The massive candlestick that formed last week is not the type of candlestick that happens in a vacuum, so I would have to believe that there are plenty of buyers willing to get involved and let this market given enough time. Currently, I don’t have any interest in shorting this market until we break down below the ¥165 level, something that does not look very likely to happen anytime soon as the move has been so brutally positive.

For a look at all of today’s economic events, check out our economic calendar.