GBP/JPY Forecast – British Pound Pulls Back Against the Japanese Yen

GBP/JPY Forecast Video for 10.04.23

British Pound vs Japanese Yen Technical Analysis

The British pound initially tried to rally during the trading session on Friday but turned around to show signs of exhaustion. By doing so, the market looks as if it is going to continue to see a bit of negativity in this region, as we are close to the top of the overall consolidation range that I have marked on the chart. The ¥166 level is an area where we see a lot of previous selling pressure, so it’s only a matter of time before the market starts heading back toward the moving averages underneath. The 50 and the 200-Day EMA indicators are sitting right around the ¥162.50 level, so that might be where we head on some type of breakdown. Breaking down below those moving averages, then we could go down toward the ¥160 level.

The ¥160 level underneath is support, therefore it does make a certain amount of sense that we would see buyers come back into the market and pick up the British pound. The British pound of course has been one of the better-performing currencies this year, and at the same time, the Bank of Japan continues its yield curve control policies. The yield curve control policies dictate that the interest rates on the 10-year JGB will not rise above the 50 basis points level, so that means that the Japanese will have to print more currency to buy more bonds in order to keep rates down.

Ultimately, this is a market that will continue to be very choppy overall, so keep an eye on your position sizing, as Friday also features the Non-Farm Payroll number, and most markets will be closed so there will be a serious lack of volume. Ultimately, this is a situation that will continue to be very volatile and therefore you need to be very cautious with the markets, as they will almost certainly have a significant amount of inertia built up by the time we get back to full volume trading on Friday. Keep in mind that Europe will be partially closed as well, so this will be especially true when we get to the United States as volume will pick up then.

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