GBP/JPY Forecast – British Pound Tests ¥180

GBP/JPY Forecast Video for 13.07.23

British Pound vs Japanese Yen Technical Analysis

The British pound has fallen rather significantly during the trading session on Wednesday to reach down to the ¥180 level. The ¥180 level is an area that previously had been supported, and of course is a large, round, psychologically significant figure. Ultimately, this is a market that is now trying to figure out whether or not it’s going to break down even further. After all, with CPI coming in cooler than anticipated in America, people are starting to bet that interest rates around the world are going to drop, which helps the Japanese yen considering that they are dealing with quantitative easing.

If we turn around and rally from here, then the market is likely to go higher, perhaps testing the ¥181.50 level, which is the top of the candlestick from the trading session on Wednesday, opening up the possibility of a move back to the ¥184 level. That being said, the market is a little overextended still, so you could see the market breakdown toward the 50-Day EMA, near the ¥177.50 level. The 50-Day EMA is very important, and a lot of technical traders will be paying close attention to it.

At this point, I am still bullish on this pair, but I would need to see some type of supportive candlestick to show signs of pushback. All things being equal, the market will eventually work off some of the initial shot higher. Working off some that froth is something that markets typically do, so therefore I think it’s probably a matter of time before buyers come back in, based upon some type of value proposition.

Keep in mind that the interest rate differential between the 2 economies still favors going higher, but we had gotten ahead of ourselves over the last couple of weeks, so perhaps we are getting a little bit of a value play coming. The ¥185 level above continues to be a major barrier, but considering how this market has moved, I fully anticipate that we could see the British pound go all the way to the ¥200 level, obviously not today or tomorrow, but sometime later this year. I have no interest in shorting this market.

For a look at all of today’s economic events, check out our economic calendar.