GBP/JPY Forecast – British Pound Pulls Back From Familiar Barrier

GBP/JPY Forecast Video for 12.12.22

British Pound vs Japanese Yen Technical Analysis

The British pound has rallied initially during the trading session on Friday, to reach the recently resistive ¥167.50 level. We also pulled back from there, so this shows that the area is in fact going to end up being a significant barrier to cross. It previously had been supported a couple of weeks ago, but it was in rather short duration so it’s a bit surprising just how much of a fight there has been here.

What this tells me is that we are more likely than not going to continue to consolidate overall in this pair, as there seems to be no real catalyst or drive to get this market moving. The Bank of England expects a 2 year recession, so that ways upon the idea of the British pound taken off, but at the same time you have the Bank of Japan willing to buy unlimited bonds, which means that they are printing unlimited currency, to fight rising rates. Simply put, this is a couple of currencies that has quite a bit of noise around it.

Ultimately, I think the big driver could be that this pair falls apart and starts dropping, if interest rates around the world start to fall. This will put less pressure on the Bank of Japan to print less yen, so therefore the idea is that the union would strengthen. On the other hand, we do take off to the upside, it might be due to rising interest rates globally, as the Bank of Japan would be forced to print more currency. Regardless, even in that scenario I would anticipate that this pair probably underperforms many of the other Japanese yen pairs.

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