GBP/JPY Forecast – British Pound Rallies a Bit

GBP/JPY Forecast Video for 24.11.23

British Pound vs Japanese Yen Technical Analysis

The British pound has initially pulled back just a bit only to turn around and show signs of life and start rallying. The ¥187.25 level being broken to the upside opens up the possibility of a move much higher. Ultimately, I do think that this market not only goes higher, but probably to the ¥190 level above. Short-term pullbacks continue to be buying opportunities, and therefore I think you will be looking for value as we go along.

In general, I think this is a market that continues to be very noisy, and of course driven by not only the interest rate differential, but also the fact that is a “risk on/risk off” type of currency pair. Beyond that, the Bank of Japan looks as if it’s nowhere near getting close to tightening monetary policy, despite the fact that occasionally they will come out and say something. Longer term, it’s likely that the market could go looking to the ¥200 level, and I do think that it’s probably only a matter time before reach that level. Underneath, not only do we have the ¥185 level offering significant support, we also have the 50-Day EMA offering more of a floor.

The Japanese yen is the main driver of this pair, and therefore you need to pay close attention to the Bank of Japan and of course the yields coming out of that country. Yields are almost nothing at this point, and of course the interest rate differential between Great Britain and Japan will continue to get you paid at the end of every day via swap. That is going to be the main driver regardless of what other people say, and therefore on the longer term it does make sense that we continue to go higher and therefore I have no interest in shorting this market anytime soon.

Buying dips continues to be the best way forward, in incremental position sizing, but keep in mind that Thursday was the Thanksgiving holiday in the United States, so liquidity would have evaporated at the end of the session.

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