GBP/JPY Price Forecast – British Pound Recovers Nicely

The British pound initially fell during the trading session on Thursday but turned around quite rapidly as the Bank of England did away with the idea of negative interest rates during its announcement. That being the case, this strengthens the case for the British pound to continue rallying, and I think that it will eventually try to break out to the upside and above the ¥144 level. Once it does, it opens up the possibility of a move towards the ¥145 level, which is a longer-term target and a large, round, psychologically significant figure anyway.

GBP/JPY Video 05.02.21

Gov. Bailey suggested during the press conference that the Bank of England has not talked about the limit on the lower interest rates, but negative rates were certainly not something that they were considering. Because of this, those who were thinking that the British pound was going to get hit due to negative interest rates are now covering their shorts, and hence a little bit of a short squeeze during the day.

With the Non-Farm Payroll announcement coming out during the day on Friday, that could be a little bit of noise affecting the risk appetite around the world, and that will have a certain amount of influence on this pair as well. Ultimately, it does look like we are going to continue to go looking towards the ¥145 level, but it may take another short-term catalyst to get there. Regardless, I would certainly not be a seller of this pair now that we have threatened the top of the most recent shooting star. That typically means that we are starting to see resistance break down yet again.

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