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Christopher Lewis

The British pound has pulled back just a bit against the Japanese yen during Monday to kick off the week on the back foot. That being said, the market is likely to continue to see a lot of noise in general, especially as we are sitting near the ¥140 level. The ¥140 level of course would be a large, round, psychologically significant figure, and that of course will attract a certain amount of attention as well. That being said, I think that we could get below there, but I see plenty of support in various spots. The first spot would be the ¥139.50 level, followed very quickly by the red 50 day EMA on the chart which is currently sitting at roughly ¥139.

GBP/JPY Video 12.01.21

Beyond that, there most certainly is a major “risk on attitude” around the world when it comes to the reflation trade in, and that does tend to favor this pair going higher, despite the fact that the United Kingdom itself has a lot of internal headaches to deal with. Speaking of which, that may make the GBP/JPY pair lag other similar pairs such as the AUD/JPY pair, the CAD/JPY pair, and the NZD/JPY pair. Nonetheless, they should all move in the same general direction, which I think will be more of the “risk on” type of behavior that selling the Japanese yen typically suggests.

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All things being equal, I think that you are looking to buy the dips, and I do believe that we will eventually go looking towards the ¥142.50 level, which was an area we had pulled back from previously. I have no interest in shorting this pair anytime soon.

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

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