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GBP/JPY Weekly Forecast – British Pound Continues to Rally Against the Yen

By:
Christopher Lewis
Published: May 26, 2023, 13:29 GMT+00:00

The British pound shoot straight up in the air during the week, showing signs of breaking above the ¥173 level.

British Pound, FX Empire

In this article:

GBP/JPY Forecast Video for 29.05.23

British Pound vs Japanese Yen Weekly Technical Analysis

The British pound has rallied significantly during the trading week, reaching the ¥173 level and looking likely to go much higher. After all, the market continues to see much upward pressure because the Japanese yen has so much downward pressure on it. The Bank of Japan continues to do yield curve control, and that, of course, will work against the Japanese yen, due to the fact that they have to print currency in order to buy bonds and keep those yields down.

On the other side, we have the Bank of England, which is very tight with its monetary policy and is fighting significant inflation, thereby keeping the British pound a rather strong currency. With this, I think it’s probably only a matter of time before we go much higher. The ¥170 level underneath will be a massive support level, which of course is a large, round, psychologically significant figure. Ultimately, we are a little bit stretched at the moment but I think that this pair is very likely to going higher given enough time.

Ultimately, as long as the Bank of Japan keeps its work on yields up, there’s almost no way the Japanese yen will strengthen. The market looks as if it is going to go for the ¥175 level, which of course is a large, round, psychologically significant figure. Ultimately, the interest rate differential will continue to be a major driver for where we go, and therefore I think this is a bullish market for quite some time. That being said, eventually, we will see the market pullback and show plenty of buying opportunities for people that are patient.

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

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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