GBP/JPY Price Forecast – British Pound Awaits Brexit Outcome

The British pound rallied significantly during the trading session on Wednesday to break above the ¥140 level ahead of the dinner meeting between Boris Johnson and von der Leyen. Because of this, it is difficult to assess exactly what is going to happen, but the reality is that market participants continue to push this pair higher. It is almost certainly is a market that continues to be a “buy on the dips” scenario, although that meeting could have a massive short-term effect if it turns out poorly.

GBP/JPY Video 10.12.20

If it does in fact end up being a “no deal” resolution, then the market is probably going to pull back towards the 50 day EMA. The 50 day EMA extends down to the 200 day EMA as far as resistance is concerned, so I do think it is only a matter of time before the buyers would jump back in based upon the fact that even if we do not get some type of Brexit deal in the short term, there is nothing out there to suggest that it cannot happen after the new year.

Looking at this chart, if we do break out above the highs from the Friday session of last week, then it opens up the possibility of a move towards the ¥142.50 level where we had seen significant resistance previously. If we can get above there, then it opens up this pair to go towards the ¥145 level. All things being equal, I think that if we get some type of shock after the meeting late Wednesday, it is probably going to end up giving us an opportunity to start buying.

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