GBP/JPY Price Forecast – British Pound Pulled Back From Similar Highs

The British pound initially tried to rally at the open on Friday but then broke back down as the ¥142.50 level above continues offer resistance. Because of this, I do suspect that we need to build up momentum before it truly breaking out to the upside, and with various economic numbers coming out softer than anticipated from London today, it is not a huge surprise to see that the pound has run out of upward pressure, at least in the short term.

GBP/JPY Video 25.01.21

To the downside, the ¥140 level is an area that will more than likely offer a bit of a “floor in the market”, and therefore I think that the market pulling back to that area will more than likely offer quite a bit of support due to the large, round, psychologically significant figure and of course the fact that the 50 day EMA sits in that same neighborhood. That was an area that previously was significant resistance, so “market memory” could come back into play as well in order to cause a bit of buying pressure. After all, most of the narrative right now is about the idea of the “reflation trade” coming into vogue again, and if that is going to be the case this pair should continue to go higher as it is more “risk on” sensitive than many other pairs.

With this being the case, as we get more good news involving the opening of economies, it is very likely that we will see a lot of noise based upon the latest headlines and the like. Coronavirus figures of course are not helping anything either.

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