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

GBP/JPY Forecast Video for 21.06.23

British Pound vs Japanese Yen Technical Analysis

The British pound fell rather hard against the Japanese yen during trading on Wednesday, as the overbought condition was finally challenged. Keep in mind that the Bank of England has a meeting on Thursday, and that could be part of the catalyst, or for that matter, it could just be a simple act of profit-taking. After all, I warned you last week that the pair had gained 700 pips, and that’s a bit excessive. That does not necessarily mean that we need to be selling anytime soon, just that the market is overdone, and you probably need to step out of the way and let it pull back enough to offer enough value to attract people into the market.

We might have to wait until after Thursday’s Bank of England meeting, which is fine, considering how overdone we are now. The ¥180 level could offer a little bit of support, and at this point in time, we are trying to threaten that level. However, it would not surprise me to see this market pull back even further, maybe down to the ¥177.50 level. Essentially, what I need to see is some daily candlestick that suggests that we are going to see the market continue its overall upward trajectory. Traders will pay close attention to not only the interest rate decision coming out of London but also thoroughly parse the statement.

While we know that the Bank of Japan is going to continue to be ultra-loose, the question now is whether or not the Bank of England looks like they are going to be forced to stay tight for a longer amount of time. I do think that’s the case, but at this point in time, I need the market to agree with me. Regardless, it’s an overbought market, and this is what happens in those situations, gravity comes back, and then we reset. It would not surprise me to see the British pound trade at ¥200, but that’s a longer-term target and not something that we will see anytime soon. As things stand right now, I believe that the ¥175 level will be a massive floor in this market.

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