GBP/JPY Price Forecast – Pound Drops Slightly Against Lowly Yen

Christopher Lewis
Published: Feb 5, 2024, 15:33 UTC

The “Dragon” has been slightly soft during the session on Monday in the early hours, however, I do believe that there are buyers underneath that are willing to get involved.

British Pounds, FX Empire

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GBP/JPY Forecast Video for 06-02-2024

British Pound vs Japanese Yen Technical Analysis

The British pound has fallen a bit against the Japanese yen during early trading on Monday, which probably isn’t a huge surprise as we’ve seen weakness in the British pound across the board. The question now is whether or not buyers will return to this market and try to take advantage of the interest rate differential. I do think that’s going to be the case, especially as the 50 day EMA is sitting just below at the 185 yen psychological level and, of course, is tilting higher.

This is a market has been in an uptrend for a while and when you look at the Japanese yen overall, it is a weak currency. The Bank of Japan is nowhere near trying to tighten monetary policy and quite frankly, can’t do it with all of the debt that Japan has sustained. So with this, I do think we go higher given enough time, but that doesn’t necessarily mean that it’s going to be the easiest trade to take. I do think you will eventually get rewarded though, so patience might be the key here as we chop back and forth overall in the world’s financial markets.

After all, the British pound has its own issues, but the pair does tend to favor its upside due to the interest rate differential, whether or not there’s a risk on sentiment also can help. Regardless, the Japanese yen is toxic. So at the very least it should fall slower than the British pound against other currencies, such as the US dollar. Ultimately, I do look for some type of bounce that I can get involved in, and then I think the market goes looking to the 189 yen level, which was the recent barrier above there. Then 190 yen would be your next target but if we did break down below the 185 yen level, I would have to reassess some things. It doesn’t necessarily mean I would be a seller of this market, it just means that I’d have to keep an eye on it.

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About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.

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