GBP/JPY Price Forecast – British pound rallied slightly against Japanese yenThe British pound rallied slightly against the Japanese yen on Tuesday as we approached the ¥147.50 level. This is an area that has been resistive in the past, but I think will be overcome if we can continue to get more of a “risk on” attitude around the world.
As long as trade fears come down, I think it’s likely that this market will continue to rally. Ultimately, the GBP/JPY pair is extraordinarily sensitive to risk appetite, which of course is sensitive to headlines around the world. The tensions between the United States and China of course have taken center stage, and if they can continue to be relatively benign, it’s likely that the market will continue to go higher. I think that it is only a matter of time before we find this market breaking out to the upside, but we could get a short-term pullback before doing so, to build up the necessary momentum.
The ¥146 level looks to be a bit of a “floor” in the market, and of course there is the uptrend line that had held previously for the most part. I think that ultimately this market will continue to trade on a motion, much like the rest of the Forex world right now, and with that in mind I believe that it is only a matter of time before headline comes along and moves it drastically in one direction or the other. I would point out that not only do we have the trade wars affecting this pair, but we also have the situation going on with Teresa May and the Conservatives in the United Kingdom. If we can come to some type of solution there, that may help the British pound as well. Perhaps this move is in anticipation of that solution.