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

By:
Christopher Lewis
Published: Jun 5, 2023, 13:54 GMT+00:00

The British pound has pulled back rather significantly during the trading session on Monday, as perhaps we have gotten a little overstretched.

British Pound, FX Empire

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GBP/JPY Forecast Video for 06.06.23

British Pound vs Japanese Yen Technical Analysis

The British pound has fallen a bit during the trading session on Monday, as we may have gotten a little too close to the ¥175 level in short order for people to feel comfortable. That being said, the market will more likely than not offer a bit of a pullback that we can take advantage of, in order to pick up a bit of value. The ¥170 level underneath would obviously be a great candidate for value, but there are support levels between here and there. The main reason for the ¥170 level being mentioned of course is the large, round, psychological importance of the number, and the 50-Day EMA racing toward that level.

Between here and there, the ¥171.50 level has been supportive multiple times a little over a week ago, and I think that could be where you start to see buyers jump into the mix. It’ll be interesting to see if that plays out, but right now I think you got a situation where it would be an area to start “scaling into a position.” Keep in mind that the interest rate differential between the British pound and the Japanese yen will continue to make this market bullish given enough time, but ultimately, I do think this is a situation where we will have to see some type of resolution to the overall attitude.

When you look at the chart, if we were to break above the ¥175 level, it would obviously be a major breakout, and it’s likely that we could go all the way to the ¥177.50 level, and then eventually the ¥180 level. Until we get some type of change from the Bank of Japan or the Bank of England, there’s no real interest in shorting this pair, but it’s probably worth noting that again, we are a bit overstretched. There are plenty of people willing to go long in this market, and I do think that will continue to be the case given enough time. In general, I think this market continues to be noisy, but I do look at it as a positive one.

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About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.

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