GBP/JPY Weekly Price Forecast – British pound explodes to the upside against yen

The British pound exploded to the upside against the Japanese yen, as the Brexit deal looks to be delayed. This gives hope of the British doing a second referendum, which I don’t think happens. However, the market is pricing in that a better situation than a “no deal Brexit” it’s about to happen.
Christopher Lewis
GBP/JPY weekly chart, January 28, 2019

The British pound exploded to the upside during the trading week, breaking above the ¥143 level easily. On Friday, we are testing the 200 day EMA, pictured on the daily charts. The ¥145 level should offer resistance as well, so I do think that we are getting close to an area where we may see a bit of a pushback. That doesn’t mean that I want to short this pair, what I believe is that we are simply looking at a pullback to find support, perhaps somewhere closer to the ¥142 level.

GBP/JPY  Video 28.01.19

Keep in mind that this pair is going to be highly sensitive to the Brexit deal, and of course headlines coming out on Twitter and news outlets. Overall, I also believe that this pair will be reacting to the US/China trade, as the pair is typically highly sensitive to global trade. Remember, the Japanese yen is also considered to be a bit of a safety currency, so if we get a lot of bad news out of that scenario, it would put downward pressure on this pair. When you look at the chart, you can see that we are still in a descending channel, which although pierced, we close on the weekly chart back within that range. Because of this, I do think that the upside is somewhat limited, but I do believe that we will go looking towards the top of the channel initially. Look for short-term pullbacks to take advantage of value.

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