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Christopher Lewis
GBP/JPY daily chart, May 22, 2019

This is a pair that is very sensitive to risk appetite, which of course makes you think of the US/China trade deal and obviously the Brexit situation. It appears that Theresa May has the backing on her “new plan” by the cabinet members, and therefore this presents a much more united front to try to get some type of deal through Parliament. That gave the British pound a little bit of a reprieve, and therefore we are starting to see possibly some short covering or maybe even some buying.

GBP/JPY  Video 22.05.19

It’s especially intriguing considering that it happened at the ¥140 level, a large come around, psychologically important number. At this point, if we break above the ¥141 level then it’s very likely we will go looking towards the ¥143.50 level above which is the scene of some clustering. The alternate scenario is that she announces something that falls with the dud, which would have this market looking to lower levels, most notably the ¥138 level, perhaps even the ¥135 level. Even with good news out of Great Britain, this pair may simply fall due to the US/China trade war, which in and of itself is a bit of a wildcard. With that in mind, keep your position size somewhat small but focus on the big picture. It does look as if we are trying to form some type of bottoming here, but obviously a breakdown is a great selling opportunity as well.

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