GBP/JPY Forecast – British Pound Pulls Back From Potential Breakout

GBP/JPY Forecast Video for 16.02.23

British Pound vs Japanese Yen Technical Analysis

The British pound has fallen a bit during the trading session on Wednesday as we have pulled back from the crucial 200-Day EMA. The 50-Day EMA sits right about where we are, so that being said it’s likely going to continue to be very noisy, as it looks like we are trying to build up the necessary propulsion to break out of this massive consolidation area. That consolidation area drops all the way down to the ¥157 level, but at the same time we have to keep in mind that markets are extraordinarily volatile at the moment, so you can’t really count on anything.

The Japanese will continue to do yield curve control, and therefore you will have to look at it through the prism of what rates are doing in Japan. If rates get close to the 50 basis point level on the 10 year bond, then the Bank of Japan has to print yen in order to buy bonds, which also allows for the central bank to buy the bonds and keep the rates down. To do so, it does weight upon the value of the Japanese yen as we flood the market with that currency.

If we can break above the ¥162.50 level, then I think the market is likely to go looking toward the ¥165 level, which is an area where we have seen quite a bit of selling pressure previously. With that in mind, I look at this as a market that is eventually going to try to build up enough pressure to take off, but we clearly are just not there yet.

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