GBP/JPY Price Forecast – Pound Continues to Dance Around Big Figure

The British pound has gone back and forth during the trading session on Monday, as traders have come back for the shortened week between Christmas and New Year’s Day. With that being the case, one would have to think that liquidity is going to continue to be an issue, and of course the British pound is going to be a bit of an issue at this point time, because we are still trying to figure out exactly what the Brexit deal covers, and perhaps more importantly what it does not. In other words, I think that the “binary trade” of whether or not they will get the deal is now in the rearview mirror, and the real work begins.

GBP/JPY Video 29.12.20

With that being said, it is worth noting that the ¥140 level has been an area where we have seen a lot of choppiness, and if you look at the chart you can see that we are forming a bit of a megaphone pattern. That normally means that we are getting ready to add some type of volatility to the mix, but that may be a story for after New Year’s Day. At this point in time, it is going to be a bit difficult to figure out where the “real money” is going to flow, at least not until after New Year’s Day. In the short term, it is probably easier to play this more or less as a range bound market, perhaps with a little bit more of an upward bias. The 50 day EMA sits near the ¥138.50 level, so I think that is probably about where the downside ends, with the upside eyeballing the ¥142.50 level.

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