GBP/JPY Forecast – British Pound Recovers After Initial Dip Against Japanese Currency

GBP/JPY Forecast Video for 28.02.23

British Pound vs Japanese Yen Technical Analysis

The British pound initially pulled back just a bit during the trading session on Monday, as traders came back from the weekend. Initially, it looked like the Japanese yen was going to regain some of its footing, but we saw the market turn right back around and suggest strength yet again. Because of this, I think it’s probably only a matter of time before we see the market break above the highs of last week, and go looking toward the ¥165 level, an area that previously had been rather supported. This would bring to light the idea of “market memory”, where support becomes resistance later and vice versa.

Furthermore, you should keep in mind that breaking above the ¥162.50 level was a very bullish sign previously, and now that we have turned around to show signs of life, that suggests that the market has broken out, pulled back, and then retested that area for support. It has found support, so therefore it’s likely that we will continue to see buyers jump into this market. The ¥165 level above of course will be rather significant, but not necessarily unable to be overcome.

You can see that there is a massive negative candlestick that broke through that level, during the time when the Bank of Japan announced that it was going to allow the 10 year JGB yield to rise to 50 basis points. Now that we have gotten beyond that shock and it’s obvious that the Bank of Japan has no interest in trying to expand that range, and therefore the Japanese yen will continue to suffer in general. At the same time, there have been members of the Bank of England recently that have suggested that rates will have to continue to go higher, so therefore everybody’s excited in one direction.

At this juncture, it looks as if the market is going to continue to be a “buy on the dips” type of scenario, and therefore a market that I don’t necessarily have any interest in trying to short anytime soon as the breakout seems to be picking up momentum at this point.

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