GBP/JPY Price Forecast – British Pound Gets Hammered

The British pound initially lurched higher but then broke down rather significantly during the course of the trading session on Friday, as people are starting to price in more of a “risk off attitude” around the world. This is interesting, considering that the Bank of England raised interest rates just 24 hours earlier, but this pair has fallen apart since then and therefore it is likely that we continue to see a move towards the crucial ¥150 level. The ¥150 level of course is an area that will attract a lot of attention from a psychology standpoint, and the fact that we had seen a lot of noise in that general vicinity to begin with.

GBP/JPY Video 20.12.21

If we do crash of that and close below the ¥149 level, that would be an extraordinarily negative turn of events. In that scenario, I would be very short of this market, expecting a move down to the ¥145 level over the longer term. On the other hand, if the ¥150 level were to hold as support, then we may turn around and try to get back towards the ¥152.50 level. Ultimately, this will come down to risk appetite more than anything else, but it is interesting to note that traders have already completely wiped out the gains from the rate hike, suggesting that perhaps Great Britain will not be able to hike rates anytime soon again. With that being the case, the market is likely to see a lot of noisy behavior, especially as we get towards the end of the year, liquidity will become a major problem going forward as well.

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