GBP/JPY Price Forecast – Pound Runs Into Resistance After Breakout

The British pound has initially tried to rally during the trading session on Monday to kick off the week on the good foot but has pulled back to form a bit of a shooting star early in trading. That being the case, it looks like we may need to pullback in order to find enough momentum to truly get going.

GBP/JPY Video 02.02.21

This is not to say that you should be selling this pair, rather that you may get an opportunity to “buy on the dips” which makes quite a bit of sense considering that we have seen so much bullish pressure in the British pound in general, and of course have seen the Japanese yen lose strength overall as well. This is mainly a reflection of the coronavirus efforts in the United Kingdom seemingly starting to work, and that of course is one of the things that traders are focusing on more than anything else right now. Furthermore, there is a Bank of England meeting this week, and we will have to see what they say about negative interest rates, but it does seem to be a scenario that has been taken off of the table, adding to more stability for the British pound.

All things being equal, I believe that the ¥140 level is the absolute “floor in the trend” right now, with the 50 day EMA breaking above it recently. I think what we are going to see here is a scenario where traders continue to look it dips as a possible buying opportunity as the market looks set to go looking towards the ¥145 level.

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