GBP/JPY Price Forecast – British Pound Sores

The British pound has rallied again during the trading session on Tuesday to reach the ¥142.50 level. While we are getting a little bit stretched over the last several days, the reality is that the market has broken through a major resistance barrier in the form of the ¥140 level, and is now looking for the next big figure, the ¥145 level. This reflects the overall strength of the British pound, and of course the fact that the Bank of Japan keeps its monetary policy so loose. Furthermore, the market looks at risk appetite in general, and reacts accordingly. This is a very risk sensitive pair, so that will come into play as well.

GBP/JPY Video 02.09.20

I am not saying that this market cannot continue to go higher straight up, but we are definitely vulnerable for some type of pullback. That pullback is not something to be selling into, rather it is a sign that you should be looking for signs of support underneath to take advantage of. After all, sometimes “buying value” is the best trade. Remember, this pair can be extraordinarily volatile, so that is something to keep in mind as well. Keep your position size reasonable, as a sudden shift in sentiment can cause havoc on your account. At this point, I would anticipate that the ¥140 level is now your “floor in the market”, just as the ¥145 level will be the longer-term target. Another thing to keep in the back of your mind is that the jobs number the United States is later this week, so that can have a lot of people taking profit over the next couple of days.

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