GBP/JPY Price Forecast – British pound tests support against yenThe British pound was noisy during the session on Tuesday, crashing into the ¥148.50 level, an area that has been important more than once. As I record this, we are sitting right on that level and testing the gap that opened the week. Because of this, we could get a larger move.
The British pound initially tried to rally during the day against the Japanese yen on Tuesday, reaching towards the ¥149 level during the day before markets got spooked by the idea of the United Kingdom leaving the customs union of the EU, perhaps without much of a deal. This has been a bit of an overreaction, and at this point it hasn’t been confirmed. Because of this, it’s likely that we are going to see a resumption of the uptrend, but at this point I would be a bit cautious.
The ¥148.50 level has been important a couple of times now, so it will be interesting to see if we can hold this level. By the end of the trading session for Tuesday, if we are above the ¥148.50 level, I suspect we will continue the uptrend longer term. The ¥150 level above is a major target and I think that the market will go looking towards that level as it is a juicy target.
The alternate scenario of course is that we continue to break down, and at that point I suspect that the real demand is closer to the ¥147.75 level, giving us a short-term selling opportunity. However, this does not change the trend, simply brings and a bit of a short-term pullback to offer value for those a little bit more longer term minded. I would keep my position size small regardless, there is far too much annoy volatility.