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GBP/JPY Price Forecast – British pound gaps lower to kick off the week

The British pound gapped lower to kick off the week, breaking below the ¥147 level. However, we have started to recover so at this point we are deciding whether we are going to return to the consolidation area that we had been in, or are we going to break down?
Christopher Lewis
GBP/JPY daily chart, October 16, 2018

The British pound gapped lower during the trading session on Monday, to start the week with a very negative tone. A lot of this was probably due to varying headlines coming out of the Brexit negotiations, which of course continues to be the main factor driving the British pound. Overall though, it’s very likely that the buyers will return as we have seen this happen more than once, the British pound will break down significantly, only to turn around and gain again. This is because I think a lot of the algorithmic traders are out there trading the headlines, but the longer-term investors are starting to understand that we are in fact getting close to the end of the Brexit negotiation, and we should have some certainty relatively soon.

You can see just how much higher the British pound wants to go, because every time we get some type of positive headlines, the British pound skyrockets. Overall, I think you will continue to see a “buy on the dips” type of situation, given enough time. I think that the moment that we get some type of certainty, the British pound will probably jump in value, and I think a lot of longer-term investors are starting to piece together huge positions. If we can finally break above the ¥150 level, that would of course be the next major hurdle, but we are days away from that happening at best. If we do fall from here, I would anticipate a lot of interest near the ¥145 level.

GBP/JPY  Video 16.10.18

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