GBP/JPY Forecast – British Pound Plunges Below ¥160

GBP/JPY Forecast Video for 17.03.23

British Pound vs Japanese Yen Technical Analysis

The British pound initially tried to rally during the trading session on Thursday but seems to be running into trouble yet again as we now find the market below the ¥160 level. By breaking below that level again, it does suggest that we have further to go to the downside. After all, we had seen a major plunge during the Wednesday session, and now we are trying to continue that overall move.

If we continue to go lower and perhaps break down below the ¥159 level, it could open up a move down to the ¥157.50 level, an area that has been important couple of times in the somewhat recent past. I would anticipate seeing a bit of support in this general vicinity, so I don’t expect the market to simply sliced through it. However, if interest rates continue to crash around the world, it will make the Japanese yen more desirable, due to the fact that the Bank of Japan will have to print less yen to keep their yield curve control policy intact.

On the other hand, if we do start to see interest rates rise again, then it will certainly be bad for the Japanese yen, as the Bank of Japan has determined that its 10 year yield in that country should be 50 basis points or less. In order to make that happen, they will occasionally have to step in and buy bonds. In order to buy bonds, they have to print yen. By doing so, they flood the market with the currency and that is exactly what you had seen last year.

However, as participants around the world are worried about financial contagion, there is the possibility that the Bank of Japan may be getting help from unforeseen circumstances around the world. If that’s going to be the case, then I would anticipate that the Japanese yen has the ability to be one of the better performing currencies for the year, as it had been so oversold during the previous year. That could send this pair much lower, due to the fact that the British pound itself seems to be having major issues.

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