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Christopher Lewis
GBP/JPY daily chart, October 23, 2019

The British pound has simply done not much against the Japanese yen during trading over the last 48 hours but that’s not a huge surprise considering that we are a bit overextended. Beyond that, Parliament has basically “kick the can down the road” when it comes to Brexit so now traders are simply sitting around and trying to figure out what to do next. It is a good sign for the British pound though that the market has essentially levitated. That of course is a very strong sign in the sense that at least people are not looking to get rid of Sterling.

GBP/JPY  Video 23.10.19

Keep in mind that this pair is highly sensitive to risk appetite around the world, so obviously market participants will need to keep an eye on headlines. It doesn’t necessarily have to be something Brexit related, but it certainly will be paying attention to that. If we get some type of shock to the system so to speak, that can quite often cause major issues as well. Keep in mind that the Japanese yen is of course a safety currency, so that is the first place of people will look if things start to fall apart economically. Ultimately, there are lot of headlines out there that could cross the wires to cause problems, but ultimately this is a market that is a bit overextended so quite frankly it will probably look for some excuse to drop from here. The 200-day EMA should offer support, just as the ¥136 level should based upon candlestick structure.

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