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GBP/JPY Price Forecast – British Pound Gives Up Early Gains

By:
Christopher Lewis
Published: Jan 4, 2021, 14:07 UTC

The British pound tried to rally during the trading session after gapping lower on Monday but has turned around drastically midday to reach towards ¥140 level.

GBP/JPY

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The British pound initially shot higher during the trading session on Monday after gapping to the downside to kick off the new year. That being said, we have seen the market turn right back around and fall towards the ¥140 level, which of course is a large, round, psychologically significant figure, and an area where people had been paying attention to for some time. The British pound of course has to deal with the idea of more lockdowns coming, but this pair is also highly sensitive to risk appetite so it will be interesting to see which one of those factors takes over in the next few weeks.

GBP/JPY Video 05.01.2021

Now that Brexit is essentially over, or at least started to be finalized, it now looks as if the British pound will have to stand on its own merits, not just in the idea of a deal being signed. That should not bode well for the Pound against some currencies, but the fact that the Pound is rallying against the US dollar due to US stimulus, that could provide a little bit of a buffer to the downside against other currencies like the yen. This is further demonstrated by the fact that we are trying to form a shooting star of sorts, and that of course is a negative sign.

The 50 day EMA underneath should offer plenty of support, marked in red on the chart. I think we are simply trying to continue the overall upward channel more than anything else, meaning this will be more of a grind than an easy trade to the upside. As far as selling is concerned, I do not think this is the area to be thinking about it.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.

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