GBP/JPY Forecast – British Pound Looking For Direction Against the Yen

GBP/JPY Forecast Video for 07.03.23

British Pound vs Japanese Yen Technical Analysis

The British pound has pulled back a bit during the trading session on Monday but continues to find plenty of buyers near the ¥163 level. The ¥162.50 level is an area that previously had been important as well, so I do think that there’s a lot of support underneath as it shows signs of importance. The 50-Day EMA looks as if it is ready to turn around and break above the 200-Day EMA, kicking off the so-called “golden cross.”

The ¥165 level above is an area that could be a target as we pierced it previously, only to turn around and fall apart. Having said that, this is all about the Bank of Japan and the fact that there is going to be a continued need by the central bank to keep interest rates lower in that country. In order to do that, they have to buy bonds in order to keep interest rates from spiking in the country. In order to buy bonds, they have to print yen, and have promised to do so in “an unlimited amount.”

Ultimately, the market has been bullish for quite some time, and therefore I think momentum will continue to be part of the picture here. However, you should also keep in mind that recently when we spiked, we tested the top of a major selloff, and therefore I think it will continue to be a major target, but it is going to be so difficult to break above there that I do not anticipate that it happens anytime soon.

Short-term pullbacks should continue to be buying opportunities, but you should also keep an eye on the fact that the market is going to be very noisy not only due to the Bank of Japan noise, but the fact that the pair is also very sensitive to risk appetite, which of course is all over the place right now. Because of this, keep in mind that sometimes people will run to the yen when either rates overall drop, or if there is a major fear out there about some type of economic issue. I do believe that eventually we will have to make a bigger decision, but right now it seems like this can be more noise than anything else.

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