GBP/JPY Weekly Price Forecast – British pound rallies into resistance

The British pound rallied during most of the week, reaching towards the ¥150 level. However, we have pulled back significantly from there which of course makes sense considering that the ¥150 level is a major psychological barrier and of course this pair is somewhat risk sensitive.
Christopher Lewis
GBP/JPY weekly chart, November 12, 2018

The British pound rally towards the ¥150 level during the week but ran into a wall of resistance. We have pulled back from there and that makes sense to me because the British pound continues to be plagued by headline risk. There is the Brexit of course and all of the wild headlines continue to fly around about that, and the uncertainty that follows. Beyond that, this pair is extraordinarily risk sensitive, and quite frankly most of the world is shunning risk right now. The rally has been rather impressive so far though, and it clearly sets up the ¥150 level as a major area to watch.

GBP/JPY  Video 12.11.18

If we can break above the ¥150 level, that would be very bullish and I think that the buyers would come into push this market towards ¥152.50 level next. However, and this is my base case currently, I think that we will pull back from here and go looking towards the ¥147.50 level again, perhaps even the ¥145 level. This market is going to move right along with stock markets, which seem to be softening on Friday, as people don’t go into the weekend carrying a lot of risk. Ultimately, I do think that this pair continues to be very erratic, so I would keep my position size relatively small. However, I think we have more likelihood of falling from here than rallying, at least for the next few weeks going forward. If we do break above the ¥150 level, the market probably explodes to the upside.

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