GBP/JPY Price Forecast – British Pound Pulls Back Towards 200 EMA

The British pound initially tried to rally during the trading session on Thursday but gave back the gains to reach down towards the middle of the hammer from Wednesday. The 200 day EMA sits just below, and could offer a little bit of support but it is very likely that the British pound will continue to struggle in general, as we have a lot of concerns when it comes to the Brexit situation which seems to be getting worse, not better. Furthermore, the United Kingdom is putting draconian measures on gatherings in the next few days, and therefore economic activity will almost certainly slow down.

GBP/JPY Video 11.09.20

The ironic part about this is that a weakening British pound plays right into the hands of the British themselves. This will help British exports become much more affordable for people around the world, and thereby will stimulate the economy. It is essentially still be loose without doing anything. It is because of this that bickering by the EU which has been weighing upon Sterling is actually a good thing for the English, unless of course you are a consumer which is an entirely different set of circumstances and conversation.

If we break down below the 200 day EMA, it is very likely that we will test the ¥136 level, down to the ¥135 level which I think has a significant amount of support in that area. One thing is for sure though, the attitude around the British pound has gotten much worse as of late, so rallies are more than likely going to be sold into for the near term. To the upside, the market could target ¥140 but we need to clear the ¥138.50 before that happens.

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