GBP/JPY Price Forecast – British pound breaks down significantly to kick off weekThe British pound broke down rather significantly to kick off the week, as we continue to see “risk off” attitude to grip the market. Ultimately, I do believe that the market may find a bid underneath, but with the bank holiday on Monday, it could have exacerbated the move a bit in north American trading.
The British pound breaks down during the Monday session to kick off the week, reaching down towards the ¥147.75 level. That’s an area that has been somewhat supportive in the past, so I won’t be surprised if we bounce from here. However, I think there’s probably even more interest closer to the ¥147.25 level, so we may have a little while to go before the buyers truly jump in. The selling pressure that we have seen during trading on Monday has been intense, and it looks as things are accelerating to the downside in the short term.
A less than warm tone between Mike Pompeo and his Chinese counterparts did nothing to help the market, not to mention the fact that the European Union has rejected the Italian budget. This leads to a lot of concern out there, so it makes sense that the very sensitive pair has fallen. It’s a run to relatively safe Japanese assets, and at this point I think we will continue to see these occasional short-term “mini meltdowns.”
I think waiting for several hours of stability might be the best way to look for value, as selling is probably something that’s a bit difficult to do at this point after this significant move. Essentially, if you are not short of the market already, you have probably missed the move overall, and it’s best to look for the market to reverse yet again, as it tends to do with the British pound.