GBP/JPY Weekly Price Forecast – British Pound Reaches 50 Week EMA

The British pound rallied during the course of the week to reach the 50 week EMA. The 50 week EMA has caused a bit of resistance, and we have pulled back. It should be noted that a large portion of the gains during the week were based upon headlines suggesting that a Brexit deal was closer, but as you have seen multiple times in the past, that ended up being refused and cold water was poured on that rally. Because of this, I do think that the market is going to remain very choppy but will obviously suddenly move in one direction or the other at times. This suggests that you need to be very cautious about your position size, and therefore should not be looking to get very big. Ultimately, I think you are probably better off leaving this one alone but there does seem to be some obvious support at the ¥135 level.

GBP/JPY Video 05.10.20

If we break down below the ¥135 level, then we are likely to drop another 200 pips. Alternately, if we break above the weekly high from this candlestick, we could go as high as ¥140, especially if it is based upon good news. That being said, there are a lot of moving pieces right now when it comes to risk appetite, not the least of which is Donald Trump contracting coronavirus, jobs numbers out of the United States disappointing, Brexit, a second wave in Europe of coronavirus, and so on. In other words, there are a whole slew of things out there looking to work against risk appetite at the same time.

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