GBP/JPY Forecast – British Pound Recovers Nicely on Monday
GBP/JPY Forecast Video for 06.12.22
British Pound vs Japanese Yen Technical Analysis
The British pound has rallied significantly during the trading session on Monday, as we have broken above the 50-Day EMA. We also have used the ¥165 level as support, an area that has been important previously. Because of this, the market is likely to continue to find plenty of volatility, but if we turn around and start to drop again, I suspect there should be plenty of buyers trying to take advantage of it. In fact, you could make an argument that this is a “double bottom” that we are trying to form.
The size of the candlestick also suggest that perhaps we are going to have quite a bit of follow-through given enough time, with the ¥167.50 level being a potential target. If we can break above there, then the ¥169 level is crucial after that. I do not have any interest in shorting this pair, at least not yet. It would require the Japanese yen strengthening against everyone and yields in the bond markets collapsing around the world as it could give the market some type of directionality as the Bank of Japan fights so hard against those rising rates, essentially “printing unlimited yen.”
On the other side, we have the British pound, which is very volatile and noisy, and quite frankly there are a lot of concerns in the United Kingdom. Whether or not that plays out in this pair remains to be seen, but it probably means that this pair will underperform over the longer term in relation to other yen related markets. At this juncture, I think this is a market that is trying to figure out whether or not it can recapture the uptrend.
For a look at all of today’s economic events, check out our economic calendar.