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Christopher Lewis
GBP/JPY

The British pound has rallied significantly during the trading session on Tuesday as we have broken above the 141.62 level. At this point in time, it looks like we could go as high as 142.50 level, perhaps even to the 145 level over the longer term. All things being equal, this is a market that should continue to find buyers on dips, but it does not necessarily mean that we shoot straight up in the air. After all, the British pound has been very noisy due to the Brexit situation just being solved, and of course the nastiness of the lock down. With that being the case, I think it is only a matter of time before we would see value hunters coming in on dips, and I think that is essentially what is going to play out here.

GBP/JPY Video 13.01.21

Looking at the 140 level underneath I think should offer an excellent opportunity to get involved to the upside if we get a pullback, and I would look at that as a potential gift. That being said, I think that the market probably shows itself to prefer pullbacks in order to build up the necessary momentum to make a bigger move. That being said, it could be very noisy, but I have no interest in shorting this pair because quite frankly there is so much out there when it comes to the idea of the “reflation trade.” Because of this, I think we will continue to see people trade the overall “risk on attitude that a pair like this suggests. With that in mind, simply waiting for dips to pick up bits and pieces of value will continue to be the best way forward.

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