GBP/JPY Weekly Price Forecast – British Pound Trying to Break Out

The British pound has rallied significantly during the course of the week against the Japanese yen, as the market has decided to try to price in a Brexit deal heading into the weekend. The British pound rally in the way it has of course is a very bullish sign and the fact that we are above the ¥140 level is a sign that we should continue to go higher. I believe at this point the pullbacks will be looked at as value, as the British pound continues to recover ahead of what people believe is going to be and negotiated settlement of the Brexit this weekend. This sets up an interesting scenario though, because quite frankly if the deal is not reached over the weekend and things sour, that could be catastrophic.

GBP/JPY Video 07.12.20

Looking at the chart, the 200 week EMA sits above at roughly ¥143, and that is my short-term target. This does not mean that we get there right away, just that we will eventually try to get there. As far as selling is concerned, I have no interest in doing so because quite frankly this type of break out shows pretty significant conviction. Longer-term, I think we could go looking towards the ¥147.50 level but that is probably a story for 2021 and not anytime soon. If we were to break down due to some type of “no deal Brexit”, I would imagine this pair going to the ¥135 level rather quickly. That is not a base case scenario, but it is a possibility still that needs to be thought of.

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