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GBP/JPY Price Forecast – British pound rallies against Japanese yen after hawkish tone

By:
Christopher Lewis
Updated: Jun 22, 2018, 05:14 UTC

After the Bank of England statement during the day on Thursday, the British pound rallied rather significantly against the Japanese yen, reaching towards the ¥146 level. As the market has reacted so strongly, it does suggest that perhaps we are starting to firm up again, as the statement was a bit more hawkish than previously released statements.

GBP/JPY daily chart, June 22, 2018

The British pound has surged higher against the Japanese yen during trading on Thursday after the announcement, and on the hourly chart I have attached to the article, you can see clearly we shot straight to the ¥146 level, where we were running into significant resistance. Ultimately, this is a market that has a lot of work to do to turn things around, but certainly the day is looking very strong for the pound itself. Beyond that, keep in mind that this pair is highly sensitive to risk appetite, so we could get a complete reversal if something along the lines of trade tariffs start getting thrown around again.

From the technical standpoint, if we can break above the ¥147 level, it will be a complete turnaround of what we have seen as of late. Until then, even though it’s been very bullish over the last several hours, I remain a bit skeptical. That being said, I would not jump in and start shorting right away, I would rather see some type of exhaustive daily candle to start doing that. Short-term strength to the upside seems to be what we are looking at, with still ever present resistance above on the longer-term time frames. I anticipate the next couple of days are going to be very volatile, and small position sizing is probably going to be one of the most necessary things to employ in your trading strategy.

GBP/JPY  Video 22.06.18

About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.

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