GBP/JPY Forecast – British Pound Recovers After Initial Pullback

GBP/JPY Forecast Video for 11.09.23

British Pound vs Japanese Yen Technical Analysis

The British pound has initially pulled back just a bit during the trading session on Friday, but turned around to show signs of life. All things being equal, this is a market that is still very bullish, and the reason the pullback has attracted enough attention that people are willing to jump in and pick up “cheap British pounds.” The 50-Day EMA underneath will offer quite a bit of support, as it has multiple times in the past. The way we have balanced does suggest that we are most certainly going to continue to see the trend rise, and therefore I think you’ve got a scenario where traders will continue to look at the interest rate differential as a main driver.

Yes, some Bank of Japan officials have whined recently about how they don’t like disruptive FX moves, but the reality is that they are the ones keeping the interest rates low in Japan, and therefore it is completely up to them. However, Japan has found itself in a situation where it either gets higher interest rates and a strengthening currency or lower interest rates and an eviscerated currency. They cannot have both options.

The ¥185 level underneath continues to offer resistance, and therefore I think a lot of people will be paying close attention to it. If we were to break higher from there and go looking to the ¥186.50 level, then we could see a lot of resistance and downward pressure. If we can break above there, then it’s likely that we will see a much bigger move to the upside, and this is something that I fully anticipate seeing over the longer term. In general, this is a scenario that I think continues to be more “buy on the dip” type of the markets.

This is a market that I think continues to see a lot of volatility, but as long as interest rates continue to favor the British pound, then it’s likely that we go higher over the longer term, and I not only believe that the 50-Day EMA underneath offers support, but I think the ¥180 level is an area where we have a “floor.”

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