GBP/JPY Price Forecast – British Pound Pulls Back Into Support

The British pound has pulled back a bit during the trading session on Monday, breaking below the ¥140 level. This is a large, round, psychologically significant figure, so it does make quite a bit of sense that the market will pay attention to it. Furthermore, we need to pay attention to whether or not we can break back above the ¥140 level. If we do, then the market is likely to continue the overall uptrend which is my base case scenario. However, we may have to pull back all the way to the ¥138 level define the massive support that I expect to see in this pair.

GBP/JPY Video 08.09.20

The alternate scenario is of course that we continue to go below the ¥138 level and fall towards the ¥135 level. I do not necessarily expect that to happen, but with the type of volatility that we have seen in some markets over the last several days, it is possible. My base case scenario is that we turn around and rally towards the highs again, extensively the ¥142.50 level. Above there, we could be looking at the ¥145 level, which is the longer-term target that I have been talking about for some time.

Quite frankly, the next 24 hours will be crucial for this market, as we continue to see the large figures come into play. The one thing you should keep in mind though is that the Monday candle was skewed a bit due to the fact that it was Labor Day in the United States, which of course took a lot of the volume out of the market in the second half of the day.

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