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Christopher Lewis

The British pound has initially fallen during trading on Tuesday only to turn around and show signs of strength again. As we are trying to break above the ¥142 level for a bigger move, there is probably some work to do in the meantime. I believe that we need to get above the ¥142.50 level to start going higher from a longer-term perspective, and that may take a bit of work. The British pound has been extraordinarily resilient over the last several months, even though the economy has been locked down drastically.

GBP/JPY Video 27.01.21

Perhaps this is driven by the fact that the British pound is “historically cheap”, and therefore longer-term players will be looking at it as a potential value play. The Japanese yen of course is considered to be a “safety currency”, so that has a certain amount of effect on how people play this trade. With that being the case, I think as long as there is more of a “risk on sentiment” around the world, it is very likely that the pair will continue to grind higher. A break above the ¥142.50 level opens the possibility of a move to ¥145, and that is most likely what we will eventually see. With that being the case, I think that short-term pullbacks will continue to be buying opportunities, while the momentum continues to build.

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I do believe that eventually we will probably go looking towards the ¥145 level, but I also recognize that there are a lot of variables out there right now they continue to cause havoc when it comes to risk appetite. Because of this, I do think that pullbacks are your friend, and of course position sizing will be crucial.

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

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