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Christopher Lewis
GBP/JPY daily chart, November 19, 2019

The British pound initially rallied rather significantly during the trading session on Monday but gave back the gains near the ¥141.50 level as the initial optimism over the weekend due to a conversation between the Americans and the Chinese has faded. There have been reports that unnamed officials in China have shown “pessimism” as to getting to a “phase 1” type of agreement. If that’s the case, then it’s very likely that the market continues to offer a lot of back and forth and difficult trading conditions. The markets have been thrown around by the US/China trade talks for quite some time, and this of course is a very risk sensitive marketplace. If that’s going to be the case, then it’s going to retain its volatility.

GBP/JPY  Video 19.11.19

At this point, it’s probably easier to simply look at this as a scenario where we are going to “revert to the mean.” This means pulling back a bit in continuing to build up the pressure to the upside. Underneath, this seems to be plenty of support near the ¥139 level, so a break below there could change some things, but right now it looks as if we are trying to form some type of pennant which will almost undoubtedly be moved by the latest Brexit headlines. Brexit continues to be just as erratic, so all things being equal this is going to be a very noisy and difficult market. That being said though, it most certainly has a lot of bullish pressure underneath so one would have to think that sooner or later we break out.

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