GBP/JPY Forecast – British Pound Recovers

GBP/JPY Forecast Video for 08.05.23

British Pound vs Japanese Yen Technical Analysis

The British pound has rallied a bit against the Japanese yen during the trading session on Friday, as we have seen a lot of strength reemerge in this market. After all, we had been in a huge uptrend for a while, and now that we have pulled back to offer value, plenty of traders have jumped back into the market to take advantage of it. Ultimately, the ¥172.50 level above is a major barrier, and I do think it makes for a nice target given enough time. With that being said, the fact that we ended up forming a hammer during the Thursday session set this up, and I think it makes a lot of sense that we would see the trend continue.

Underneath, we have the ¥167.50 level offering support basically just below the candlestick for the Thursday session. I think at that level, a breakdown below it would open up the possibility of a move down to the 50-Day EMA which is basically at the ¥165 level. Ultimately, this is a market that has shown a lot of resiliency, and I think that continues to be a major factor in this market. Alternatively, I do think that we eventually break out above the highs, as interest rates around the world climbing works against the Japanese. Remember, the Bank of Japan continues to fight higher interest rates, by purchasing 10 year JGBs in the open market.

In order to do so, they need to print more currency, so that obviously has a major influence on what happens next. Ultimately, I think the Japanese yen will continue to see a lot of negativity, and therefore I think the markets will continue to look higher, although it will probably end up being very noisy to say the least along the way. Because of this, I’m looking for short-term pullbacks to take advantage of, so that I can find value in a market that has been so resilient and strong. The British pound of course continues to see a lot of inflows as inflation in the United Kingdom has been so strong, setting this up as a perfect scenario for a bullish market.

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