GBP/JPY Price Forecast – British pound continues to falter

The British pound has broken down significantly during the trading session on Friday, slicing through the ¥130 level like it wasn’t even there. With that being the case, the market looks likely to test the ¥129 level, where we could see a move down to the ¥125 level next. This market continues to be very negative and therefore very one-sided.

GBP/JPY  Video 05.08.19

That being the case though, we have not truly retested the ¥130 level so I would not be surprised at all to see a short-term bounce. That short-term bounce should be thought of as a potential selling opportunity as there is far too much negativity out there to believe that this pair will suddenly take off to the upside. After all, the Japanese yen is a safety currency while the British pound of course is under duress due to the Brexit and a world of uncertainty. With all that in mind it makes perfect sense that this pair continues to fall.

Ultimately, I think that it’s not until we break above the ¥133 level that we could take any rally seriously. Beyond that though, you should also keep in mind that there is the possibility that we get a “bear market rally”, which of course can be rather brutal. In that scenario, we could rise quite rapidly but I think at the first signs of trouble it’s very likely that the sellers will come in and punish the British pound for trying to rally. Ultimately, it’s only a matter time before we break to a fresh new levels as the Brexit will be solved between now and October 31.

Please let us know what you think in the comments below