GBP/JPY Price Forecast – British pound continues to dance around major level

The British pound continues the bounce around the ¥145 level, an area that will attract a lot of attention due to the large, round, psychological significance of it. This area has attracted a lot of tension in the past as well, so market memory also will come into play.
GBP/JPY daily chart, November 27, 2018

The British pound rallied significantly during the trading session on Monday, breaking above the ¥145 level as it was more of a “risk on” scenario around the world. Stock markets in Asia, the European Union, and North America all rallied, so it makes sense that the Japanese yen would sell off a bit. This isn’t to say that the “all clear” should be sounded, just that a technical bounce was ready to happen.

GBP/JPY  Video 27.11.18

Ultimately, this market will move with risk appetite overall, and of course the concerns about the Brexit. While the EU and Teresa May have agreed on something, she still has to get that proposal through parliament, and that of course is going to be the biggest struggle she faces. We already know that over 90 conservative members are against the proposed agreement, so I don’t think that the British pound will be able to take off to the upside based upon risk appetite alone. Ultimately, if you are looking to take advantage of risk appetite improving, you may be better off trading other currencies against the Yen that don’t have the negativity of the Brexit overhanging them. Some examples would include the NZD/JPY pair, the AUD/JPY pair, and the EUR/JPY pair as well. I anticipate that although this market may be ready to bounce a little further, the downside is certainly the path of least resistance as we continue to see a lot of drama involving Britain leave and the EU.

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