GBP/JPY Price Forecast – British pound pulls back

The British pound pulled back a bit during the trading session on Thursday as we await more clarity with the Brexit. At this point, I think that we had gotten a bit ahead of ourselves so it makes sense that we pull back.
Christopher Lewis
GBP/JPY daily chart, February 01, 2019

The British pound has pulled back during the trading session on Thursday, as we have gotten a bit ahead of ourselves as of late. However, the impulse of bounce from the bottom is a very encouraging sign, but on the other hand you can also make out that the 200 day EMA has cause quite a bit of resistance. I don’t know if it is the 200 day EMA based upon algorithmic trading, or if it is the ¥145 level that had people taking profit, but either way it does make sense that this area had been a bit too much. Underneath, we have the 50 day EMA which is coinciding currently with the ¥142 region, so I do think that the downside is somewhat limited in the short term. I think support extends down to the ¥140 level, so it’s very likely that a supportive candle will attract some order flow into the British pound.

GBP/JPY  Video 01.02.19

All things being equal, this is probably going to be driven by headlines surrounding the Brexit, so keep in mind that noise is going to be a major issue. However, I do think that if we did turn around and break down below the ¥140 level, that would be extraordinarily bearish. I do think at this point though we are starting to look at a potential bottom in the British pound overall. One thing to point out here though is that this pair is highly sensitive to risk appetite, so global tensions could cause problems as well.

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