GBP/JPY Forecast – British Pound Gets Hammered as Bank of Japan Flinches

GBP/JPY Forecast Video for 21.12.22

British Pound vs Japanese Yen Technical Analysis

Overnight, the Japanese have decided to allow the interest rate of their bonds to go to the 0.50% level, instead of the 0.25% level, due to the fact that it was putting far too much pressure on the bank to keep those rates down. Because of this, the market is likely to continue to reprice the Japanese yen, but a lot of this will come down to the idea of whether or not they will hold the 0.5% barrier. The market will more likely than not test that theory, but if they do, that means that the market will probably see the Japanese yen still be relatively soft against most currencies around the world.

On the other hand, if we were to see the Bank of Japan completely abandoned trying to keep rates down, then we would see the Japanese yen strengthened against almost everything out there, as it had been sold off so drastically. At this point, it’s very dangerous to say the least, mainly due to the fact that it’s the time of year where a lot of noise can come into the market and cause chaos. After all, the market is likely to see a lot of people ignoring what’s going on, so the lack of liquidity could cause major issues.

The size of the candlestick obviously suggests that at the very least, the market is likely to stay somewhat suppressed. If we were to break down below the ¥160 level, then we could continue to drop significantly. On the other hand, if the market were to turn around and break above the ¥162.50 level, then we could bounce toward the ¥165 level.

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