GBP/JPY Forecast – British Pound Threatening a Breakout

GBP/JPY Forecast Video for 04.07.23

British Pound vs Japanese Yen Technical Analysis

The British pound has shown itself to be rather bullish to kick off the trading week on Monday, as we are trying to do everything we can to break out to the upside. Keep in mind that the Bank of Japan continues its loose monetary policy, and that will be a major driver of where this pair goes in the future. With that being the case, I like the idea of buying dips going forward, offering a bit of value that you can take advantage of.

All things being equal, I think this market breaks toward the ¥185 level given enough time by the interest rate differential between the United Kingdom and Japan, which is extraordinarily wide. Underneath, I think there is a significant amount of support near the ¥180 level, which is a large, round, psychologically significant figure and an area where we’ve previously seen a little bit of support.

If we were to break down below there, then the market could go down to the ¥175 level, which is where the 50-Day EMA currently resides. All things being equal, the market will continue to see a lot of noisy behavior, and we are a little bit stretched at this point, so I think a little pullback does make sense. On the other hand, if we were to simply shoot through the ¥185 level, then the market could go much higher. Kicking off the next “leg higher.”

That being said, I think the market is stretched and sets up a bit of a pullback that we can take advantage of “cheap British pounds.” The 200-Day EMA is all the way down at the ¥168 level, so the fact that we are this far ahead of the 200-Day EMA does suggest that we are overdone. Regardless, it also tells me that it’s not a market that you need to be shorting under any circumstances. Be patient, and wait for some type of opportunity to get long again. Chasing this trade is not going to be the way forward, and therefore I think you need to understand just how to wait for an optimal entry.

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