GBP/JPY Forecast – British Pound Rallies Against the Japanese Yen

GBP/JPY Forecast Video for 22.03.23

British Pound vs Japanese Yen Technical Analysis

The British pound has rallied a bit against the Japanese yen during the trading session on Tuesday, showing signs of life as we are testing the 50-Day EMA and the 200-Day EMA indicators. Ultimately, this is a situation where I think you’ve got a lot of questions to ask, but it certainly looks to me as if the British pound is trying to find its footing against the Japanese yen, or more explicitly, the Japanese yen is struggling against the British pound, and many other currencies around the world.

Pay close attention to the bond market because higher interest rates around the world will put pressure on the Japanese yen as the Bank of Japan continues to implement yield curve control. They have a hard limit of 50 basis points on the 10 year note, but at this point in time it’s not overly threatened. However, as rates rise, people will start to predict that the Japanese will have to print more currency in order to buy those bonds. This is exactly what happened last year, so there is a certain amount of recency bias to that as well.

Underneath, the ¥160 level is an area where we have seen support multiple days in a row, and have not been available to close below, despite the fact that it had attempted to do so for most of the last week. In other words, it does make quite a bit of sense that the market will continue to look at the ¥160 level as a significant barrier, and as long as we can stay above there one would have to think that there are buyers willing to get involved. Just above, we have the ¥162.50 level, an area that is of interest due to market memory coming into the picture, but it’s likely that we could then go to the ¥165 level. The ¥165 level has been a significant barrier previously, so one would have to assume that it is still very much intact. If we can break above there, obviously it would be very bullish but I don’t see that happening in the next day or so.

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