GBP/JPY Weekly Forecast – British Pound Gives Up Gains Against Yen

GBP/JPY Forecast Video for 10.04.23

British Pound vs Japanese Yen Weekly Technical Analysis

The British pound has been all over the place against the Japanese yen during the course of the week, initially falling, only to turn around and shoot straight up into the upside, and then pulling back to show less than a positive look. That being said, the market continues to see a lot of the risk appetite around the world dissipate. Alternatively, the British pound will rally against the Japanese yen in times of “risk on behavior”, and then of course it will fall against the Japanese yen in “risk off behavior.”

Ultimately, this is a pair that also has to pay close attention to the Bank of Japan and its yield curve control, as we continue to see the Bank of Japan fight rising rates in that country. As interest rates rise, they have to print more Japanese yen in order to buy Japanese bonds. That is what has worked against the value of the yen for so long, and when you look at this chart, you can see although it’s been choppy, it has been very bullish over the last couple of years.

In the interim, it’s obvious that we are in a bit of a range, with resistance hanging around the ¥166 level. The support found closer to the ¥160 level also offers support, so I think that is the range that you will be trading in for a while. Ultimately, this is a market that I think needs to make a bigger decision eventually, but we are not at that point quite yet. Breaking out of that range obviously could get the markets moving, but in the short term we are more likely than not going to continue to be a situation where the latest interest rate moves will continue to have a major influence on the Japanese yen, and therefore you will have to pay close attention to the bond market. Ultimately, even if we do rally from here and break above the top the candlestick, there is a lot of noise right around the¥170 level, so that’s probably the interim ceiling.

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