GBP/JPY Weekly Forecast – British Pound Continues to See Volatility Against Yen

GBP/JPY Forecast Video for 13.03.23

British Pound vs Japanese Yen Weekly Technical Analysis

The British pound has fallen quite a bit during the trading week but has found support underneath to show signs of life. The 50-Week EMA sits underneath in order to offer a significant amount of support. All things being equal, the market continues to see a lot of volatility and choppy behavior, but at the end of the day you have to look at this through the prism of what’s going on with the Japanese yen more than anything else.

Speaking of the Japanese yen, the Bank of Japan continues to feel the need to do yield curve control, which means they will be making sure that the 10 year yield in Japanese bonds doesn’t rise above 50 basis points. In order to do so, they will have to continue to buy bonds in order to drive those rates down. In order to buy bonds, they have to be willing to print more yen. At the end of the day, they are flooding the market with currency, therefore making the value of the yen lower as the laws of supply and demand dictate.

It’s worth noting that the previous week ended up forming a massive shooting star, so it should not be a huge surprise that we had fallen during the week. The question now is whether or not that sticks. Right now, it looks like we may be getting ready to go in some type of trading range, as we have 2 conflicting candlesticks in a row. Ultimately, the British pound has been a bit of a laggard against the Japanese yen, so while it will follow other JPY-denominated pairs, it may not be as quick to move.

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