GBP/JPY Forecast – British Pound Turns Around After Initial Selloff

GBP/JPY Forecast Video for 17.05.23

British Pound vs Japanese Yen Technical Analysis

The British pound initially fell during trading on Tuesday against the Japanese yen but has found plenty of buyers underneath the ¥170 level to turn things around and show of the upward trend coming back into favor. At this point, the market looks like it will probably run toward the highs again, near the ¥172.50 level. Breaking above the ¥172.50 level then opens up the possibility of a run to the ¥175 level, an area that is a large, round, psychologically significant figure and would almost certainly attract a certain amount of attention.

Pullbacks at this point continue to find plenty of buying, as we continue to see the interest-rate differential drive this pair much higher. Ultimately, this is a situation where market participants will continue to look at the monetary policy coming out of the Bank of Japan as reason enough to short the Japanese yen, and of course, the United Kingdom continues to fight inflation, thereby keeping the interest-rate differential quite wide. If that were to change, obviously, that would have a major influence on what happens next with the pair, but at this point, it just does not seem to be very likely in this environment.

The 50-Day EMA is near the ¥166.50 level and is rising, showing signs of support. The market continues to be very noisy, but I do think at this point it’s obvious as to which direction it wants to go over the longer term. The recent action is forming something along the lines of a bullish flag, but that remains to be seen as we haven’t really broken out. Furthermore, it’s probably worth noting that the recent action continues to be choppy which makes quite a bit of sense considering there are so many questions out there when it comes to where risk appetite and momentum are going. As long as that’s the case, you can probably count on a lot of noisy behavior but also inertia being built up, which could make for a much bigger move down the road. With this, I still like buying dips and will continue to do so.

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