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Christopher Lewis
GBP/JPY

The British pound has initially tried to rally during the trading session on Thursday but found the area above the 50 day EMA to be a bit too expensive, so we then broke down and reached below the ¥136 level. At this point, it looks very likely that we will probably go looking towards the ¥135 level which is a large, round, psychologically significant figure. That area has been tested multiple times, but it has also been pierced to the downside and therefore if we can break down below there it opens up the possibility of a move to the ¥133 level.

GBP/JPY Video 16.10.20

To the upside, it now looks as if the ¥138 level is going to continue to be rather resistive, so I am not a huge fan of trying to aim for anything beyond that unless of course we get some type of news catalyst to get things going, which almost certainly would have something to do with Brexit. That is the biggest problem here, Brexit still influences what goes on with the British pound because we have not made any real progress when it comes to figuring that entire situation out so keep that in mind.

With that being the case, I think that we need to keep your position size rather small, and quite frankly if you want to be trading the Japanese yen, you could probably do it against a multitude of other currencies that do not have that headline risk involving Brexit. Nonetheless, it looks to me like we will probably try to find some type of support in this general vicinity, so I anticipate choppy and overall sideways action without some type of news catalyst.

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

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