GBP/JPY Forecast – British Pound Pulls Back Further

GBP/JPY Forecast Video for 12.07.23

British Pound vs Japanese Yen Technical Analysis

The British pound has fallen a bit during the trading session on Tuesday, as it looks like we are getting ready to go back to the ¥180 level, which is a major support level that we have seen previously. Furthermore, it is a large, round, psychologically significant figure, and seems to be the area that the 50-Day EMA is racing toward. The market is obviously very bullish, but it’s probably a bit overdone, and therefore it makes a certain amount of sense that we do get this pullback. This should attract plenty of “value hunters”, as the British pound will continue to appreciate against the Japanese yen over the longer term.

Keep in mind that the Bank of Japan continues to keep monetary policy extraordinarily loose, therefore it makes sense that the Japanese yen will continue to lose value. The trend has been very strong for quite some time, due to the fact that the Bank of England has to continue tightening monetary policy due to the massive amount of inflation that is found in the United Kingdom. As long as that continues to be the case, the interest rate differential will continue to push this pair higher. In fact, I think it’s probably only a matter of time before we go looking to the ¥185 level above. It looks as if we are trying to build up enough momentum to make that happen, and therefore this makes quite a bit of sense as well.

If we were to break down below the 50-Day EMA underneath, then it’s possible that we have a more stringent pullback ahead of us, but at this point I don’t think that’s very likely. In fact, we are already starting to see this market push back a little bit during the day on Tuesday, so I think this correction probably stays above the ¥180 level, and therefore I’m looking for some type of supportive candlestick to start buying again, as the trend reasserts itself over the longer term. I have no interest in shorting this pair, and I think that buying the Japanese yen is something that will be almost impossible for the foreseeable future.

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