GBP/JPY Price Forecast – British Pound Continues to Go Sideways

The British pound initially rallied a bit during the trading session on Tuesday, breaking above the 50 and the 200 day EMA indicators on the chart. Both of those are flat though, so it tells you that we are simply going sideways. Ultimately, this is a market that I think continues to see a lot of questions when it comes to directionality, and at this point I am essentially looking at the market as a hostage to the Brexit nonsense that will continue to cause issues.

GBP/JPY Video 21.10.20

The market certainly sees a lot of support underneath at the ¥135 level, which has been important for a long-term standpoint as well, but at the same time we have seen a lot of resistance at the ¥138 level. As we are essentially in the middle of that range, it is likely that the market is simply going to chop back and forth. Ultimately, I look for this market to reach the outer levels of the range in order to play against those areas. Ultimately, this is going to come down to the latest headline coming out of Brexit, so it is almost impossible to trade this market with any type of real confidence.

Furthermore, it is also a currency pair that is highly sensitive to risk appetite, and if risk appetite falls apart that will work against the value of this pair as well, as people start looking towards the Japanese yen for some type of safety. Ultimately, I think the one thing that you probably need to take away is that you need to keep your position size relatively small.

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