GBP/JPY Forecast – The British Pound Continues to Shoot Straight Up in the Air

GBP/JPY Forecast Video for 16.06.23

British Pound vs Japanese Yen Technical Analysis

The British pound has rallied significantly against the Japanese yen during the trading session on Thursday, as we continue to see a lot of noisy behavior. Central banks around the world remain very tight, while the Bank of Japan remains very loose. This sets up a perfect “carry trade”, as the Japanese yen loses value quite rapidly. One has to wonder when the Bank of Japan will step out and try to talk the markets back down, and with Friday being a Bank of Japan meeting, it does make a certain amount of sense that we would see Friday set up a potential pullback.

That being said, the Bank of Japan has already suggested that they were not ready to change monetary policy anytime soon, so that could come into the picture as well. The ¥175 level underneath should continue to be a massive support level, and therefore if we do pullback to that area, I think a lot of traders would be willing to step in and try to take advantage of “market memory” that should come into play there. With this being the case, I think you’ve got a situation where on pullbacks you have to look for cheap pounds.

If we break above the ¥180 level, then it opens up the possibility of a much bigger move, and I do think that eventually that happens. However, I don’t like chasing a market that has acted like this and would rather try to short the yen against other currencies it may not have moved quite as quickly. All things being equal, this is a market that you cannot be a seller of, less of course the Bank of Japan suddenly hikes interest rates, which is something that I just don’t see them doing, because quite frankly the Japanese have far too much debt to start raising rates. Quite frankly, the Bank of Japan has a situation where there is no good solution, and that will continue to be a major driver of where we go going forward. I like the idea of buying dips along the way, fully anticipating that the British pound could go all the way to ¥200 before this is all said and done.

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