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Christopher Lewis

The British pound has initially tried to rally during the trading session on Monday as traders came back to work. That being said, the market is likely to see a little bit of trouble here at the ¥142.50 level, as it has been an area of resistance recently. Ultimately, I think this is a market that will probably pull back to find buyers underneath. I believe that the ¥140 level will continue to be important, and therefore I would be looking at the area as a potential buying opportunity, especially as the 50 day EMA sits just below it. The fact that we continue to struggle to break to the upside is not a huge surprise to me, simply because we have seen so much trouble over the last week or so.

GBP/JPY Video 26.01.21

All things being equal, I do think that this pair eventually takes off to the upside but there are a lot of things in the United Kingdom that have people a bit concerned. The lockdowns of course weigh upon the British pound, but when you look through that and into the future, it is worth noting that the British pound is somewhat historically cheap at this point, despite the fact that we have been rallying for so long. With this in mind, I do think bit “buying on the dips” will continue to be the way most traders look at this pair.

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I currently do not have any scenario or set up and bind to start selling this pair, but I suppose if we had a major “risk off event” it might be one of the first pairs to really nosedived. That being said, I suspect that we continue to see more of what we have seen over the last several weeks.

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

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