GBP/JPY Forecast – Pound Continues to Find Buyers on Dips

GBP/JPY Forecast Video for 26.01.23

British Pound vs Japanese Yen Technical Analysis

The British pound has pulled back a bit during early trading on Wednesday but has found quite a bit of buying pressure underneath the ¥160 level to turn things around. At this point, it looks like we are trying to build up some type of momentum for a turnaround. After all, you can look at the recent action that has formed a massive “W pattern”, and it does suggest perhaps we could go to the top of the “wipeout candle” from December 20 of last year. That would have the market going toward the ¥166.27 level, and into a huge area of noise.

This does make a certain amount sense considering that the Bank of Japan is currently in the midst of yield curve control and there are a lot of people paying close attention to the Japanese yen. If the interest rate situation in the world continues to pick up, it’s likely that we would see the Bank of Japan being forced to buy more bonds. If that’s going to be the case, then they are floating more Japanese yen into the system. It’s a simple supply and demand question.

That being said, this is also a pair that is highly sensitive to risk appetite in general, so I do think that the volatility will continue to be a major problem. Given enough time, it’s very likely that we will have to make a rather large move, but even if we were to turn around a bounce from here, I don’t know what would push us to new highs. On the other hand, if we do break down from here, the ¥157.50 level will more likely than not end up being supported.

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