GBP/JPY Forecast – British Pound Pulled Back Slightly Against Japanese Yen

GBP/JPY Forecast Video for 02.08.23

British Pound vs Japanese Yen Technical Analysis

The British pound initially tried to rally during the trading session on Tuesday but gave back quite a bit of gains as it looks like we are running into a bit of exhaustion. Keep in mind though, this is a market that had reached rather far to the upside for a while, and now it looks like we are finally acknowledging gravity. This does not necessarily mean that I am going to be a seller, just that the market will more likely than not give us an opportunity to pick up “cheap pounds” against the Japanese yen rather soon. I would be especially interested near the ¥180 level, as it is a large, round, psychologically significant figure, and an area that has been important in the past.

The 50-Day EMA is racing toward the ¥180 level, and therefore I think it adds even more credence to that idea being supported. This does not mean that we cannot go straight up in the air from here, just that I don’t like the idea of chasing this pair after it has had such a crazy bounce. All things being equal, I do think that we eventually get to the ¥185 level, but I also recognize that scenario that will be difficult to get above. Once we do, then it opens up more of a “buy-and-hold” scenario, and clearly the Bank of Japan and its ultra-loose monetary policy is going to continue to cause major issues in this market, and therefore I think you got a situation where the Japanese yen cannot be bought. That doesn’t necessarily mean that we can’t pull back, because after all sooner or later people are going to try to take profits.

All things being equal, this is a scenario where I am looking toward the market through the prism of interest rate differential, and the fact that you get paid to hang on to this pair for quite some time. Eventually, we do go higher, but I think in general, the 50-Day EMA underneath continues to offer a floor in the market, and therefore we need to stay above there to keep this positive momentum.

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