GBP/JPY Weekly Price Forecast – British Pound Gives Up Most of the Weekly Gains

The British pound initially rally during the course of the week, and then shot straight up in the air on Thursday as the Bank of England raised interest rates. That being said, the market is likely to see a lot of noisy behavior as we head towards the end of the year, and of course we all have to keep an eye on risk appetite as this pair is highly influenced by it. At this point in time, the most interesting level to me is the ¥149 level, because if we break down below there it is likely that we will see this market really take off to the downside, perhaps reaching down towards the ¥145 level.

GBP/JPY Video 20.12.21

On the other hand, if we were to turn around a break above the ¥152.50 level, then it is likely that we go towards the ¥155 level. The way that the market had given back the early gains from the interest rate hike on Thursday tells me that the market is not necessarily looking for further tightening, and it is worth noting that the selloff was almost immediate. That being said, we have a couple of weeks’ worth of illiquid markets ahead of us, so we could have a major breakout suddenly, only to turn the things right back around. Looking at this chart, it is easy to see that we could be making a topping pattern, but it is not until we break down below the ¥149 level that it gets confirmed. One thing is for sure, the reaction on both Thursday and Friday certainly suggests something’s wrong.

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