GBP/JPY Forecast – British Pound Hangs Around the 50-Day EMA

GBP/JPY Forecast Video for 21.09.23

British Pound vs Japanese Yen Technical Analysis

The British pound has pulled back just a bit during the course of the trading session on Wednesday but found support just below the 50-Day EMA to show signs of life. If we can bounce from here, then we could continue the overall longer-term trend. That being said, you need to keep an eye on the Bank of England interest rate decision early Thursday, and of course the Bank of Japan interest rate decision on Friday. Beyond the interest rate decisions, you also have to pay attention to the statement and press conference for both of these countries. In other words, the next couple of days could be rather noisy for this currency pair, and therefore you need to be cautious about your position sizing.

If we can turn around and take out the ¥184 level to the upside, it’s very likely that we continue the overall uptrend. However, if we were to break down below the ¥182 level, then we may get an opportunity to buy this pair down at the ¥180 level. Notice I didn’t say anything about selling this pair, because quite frankly I just don’t see how that happens. In general, this is a market that I think continues to see plenty of reasons to get long, not the least of which would be the interest rate differential which does tend to drive the currency pair over the longer term. While the Bank of England is expected to raise rates, it’s still an open question as to whether or not the Japanese will. Even if they did, the interest rate differential will remain very wide, thereby making the British pound much more desirable to own than the Japanese yen. Traders get paid to hang on to this pair, and that’s been the case for ages now, which you can clearly see on the longer-term charts.

If we were to break down below the ¥180 level, then I may have to reassess some things, but right now I just don’t see that happening anytime soon, so therefore I remain bullish, but also recognize that this is more of a grind higher than anything else just waiting to happen. The next couple days can be noisy, but I don’t know that they will change everything.

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