GBP/JPY Forecast – British Pound Gives Up Early Gains Against Japanese Yen

GBP/JPY Forecast Video for 11.07.23

British Pound vs Japanese Yen Technical Analysis

The British pound initially tried to rally during the trading session on Monday, but then gave back gains to show signs of hesitation. Quite frankly, I think this is a market that’s simply trying to pull back in order to find value, or perhaps support so that we can continue the overall drive higher.

Remember, the interest rate differential between the Bank of England and the Bank of Japan is very strong, and therefore it’s likely that we could continue to see a lot of buyers coming in to pick up and take advantage of the “swap” at the end of the day, just like the old “carry trade” days that had been so prevalent in the Forex market a few years back.

The ¥180 level underneath is a large, round, psychologically significant figure, and therefore I think a lot of people will be paying close attention to it. Furthermore, we had seen a bit of support in that general vicinity a couple of weeks ago, so it all ties together quite nicely. Just below there, we have the 50-Day EMA indicator, which is sitting right around the ¥177 level. In general, I think this is a situation where you are looking for value, and willing to take advantage of it. Ultimately, I think the market is trying to build up enough momentum to reach the ¥185 level, perhaps even break above their for a longer-term move.

With the fundamental situation between the Bank of England and the Bank of Japan being so wide, I think it’s possible that we could see the possibility of a move to the ¥200 level. All things being equal, this is a situation where we continue to see a lot of value hunting coming into the market given enough time, but we are a little bit overstretched at this point, and therefore a pullback does make a certain amount of sense. That is in the selling anything it’s change, and I think a lot of people will be looking for “cheap British pounds” to take advantage of. All things being equal, I am bullish but I also recognize that you need to find signs of momentum shifting to the upside.

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