GBP/JPY Forecast – British Pound Shows Extreme Volatility at Resistance

GBP/JPY Forecast Video for 31.03.23

British Pound vs Japanese Yen Technical Analysis

The British pound has gone back and forth during the trading session against the Japanese yen on Thursday, as we are approaching a rather significant resistance barrier. The ¥164 level begin significance resistance all the way to the ¥165 level. Because of this, I would anticipate the market pulling back a bit given enough time, but it looks like we are trying to fight back, clawing our way from the bottom of the daily candlestick.

Keep in mind that a lot of this is going to come down to the Bank of Japan and its yield curve control program, which is to keep interest rates at 50 basis points or lower against the 10 year JGB. As interest rates rise around the world, it puts interest rate pressure on the Japanese yen, as the Bank of Japan will have to print more currency to buy those bonds and keep that rate down. Of course, the exact opposite is true as well. If rates fall around the world, that typically gives a little bit of a reprieve for the Japanese, allowing the Japanese yen to strengthen a bit. That’s the game we have been playing for a while, and I just don’t see how it changes anytime soon.

Below, we have the 200-Day EMA near the ¥162 level, but it is flat, right along with the 50-Day EMA which sits just underneath it. Because of this, it is very likely that the market remains somewhat range bound, especially as there is no real clarity about risk appetite. It seems like every time we start to see risk appetite pick up, suddenly we have a situation where some type of negativity comes back into the market as nobody really knows what’s going on.

The candlestick from the Wednesday session was rather bullish, so I don’t necessarily think that if we do pull back it’s going to be a shot straight down. I think it is probably going to be more or less a bit of a grind, which has been the case for quite some time with the rare exception of an impulsive candlestick in this pair. In other words, it’s probably more or less the same.

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