GBP/JPY Weekly Forecast – British Pound Bounces From Extreme Lows for the Week
GBP/JPY Forecast Video for 06.02.23
British Pound vs Japanese Yen Weekly Technical Analysis
The British pound has fallen hard during the trading week, as the Japanese Yen continues to strengthen. However, it has bounced from the bottom of a major consolidation area, and it looks as if it is not quite ready to give up. With that being the case, I think we continue to bang around in this same area that we have been in for a while, as the ¥155 level underneath continues to be major support, and of course the ¥162.50 level has been major resistance. A lot of this comes down to the Bank of Japan and whatever it is they are trying to accomplish with their monetary policy, which is essentially keeping the 10 year yield down to 50 basis points.
As interest rates rise, it causes the Japanese to buy more bonds, meaning that they are essentially “printing yen”, and that of course drives down the value of that currency. Whether or not that sustains momentum is a completely different question, but at this point I think we’ve got a situation where you have to pay close attention to bond markets more than anything else, but we should get some clarity rather soon. Ultimately, this is a market that I think is going to continue to be very noisy, so you need to keep that in mind, but I think at the end of the day, we are heading back toward the 50-Week EMA above, perhaps even higher than that, but we will have to wait to see what bonds do around the world and whether or not it puts more pressure on the Bank of Japan.
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