GBP/JPY Forecast – British Pound Slams Lower Against the Japanese Yen

GBP/JPY Forecast Video for 24.04.23

British Pound vs Japanese Yen Technical Analysis

The British pound has slammed much lower during the trading session on Friday, crashing into the ¥165.50 level. This is an area that’s been important multiple times in the past, and an area where you would expect to see a little bit of “market memory” come into the picture. If and when we bounce off here, it could be a nice buying opportunity, as it could open up the possibility of a move back to the ¥168 level.

Underneath, the ¥165 level offers a certain amount of support from a psychological standpoint, and it could very well be an area where more buyers would enter the market. The 50-Day sits just below the ¥164 level and is rising quite rapidly. Just above, we have the ¥169.50 level and the ¥170 level are both areas where we could see resistance. We can break above there, then it’s likely that we could go much higher for more of a “buy-and-hold” type of scenario.

Going back to the ¥165.50 level, that’s also where we had sold off from so drastically in November when the Bank of Japan allowed the 10 year JGB rate limit to go from 25 basis points to 50 basis points. We have done a complete “round-trip” from there, which makes quite a bit of sense considering that the interest rate differential greatly favors the British pound, and probably will for the foreseeable future. Japan is in the situation where they can either fight higher interest rates or have a valuable currency, not both.

The size of the candlestick on Friday is somewhat telling, so we may have a little bit further to go to the downside, but I certainly would not be a seller at this point, and would not go short of the market, just due to the fact that there is so much momentum to the upside over the longer term. At this point, it’s simply a matter of finding a little bit of value and taking advantage of it. That being said, I think this is a situation where you are looking for value, and then taking advantage of it when it occurs.

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