GBP/JPY Weekly Price Forecast – Plunges As No Deal Becomes Possible

The British pound initially tried to start rallying right off the bat this week but found a lot of resistance at the ¥140 level. We have since seen the market plummet, mainly due to the fact that after the dinner meeting between Ursula von der Leyen and Boris Johnson produced nothing. Furthermore, both have been quoted as saying that a “no deal Brexit” is more likely than not at this point, but we have heard all of this before. We also recognize that both suggested that a decision needed to be made by Sunday in order to determine when to speak next.

GBP/JPY Video 14.12.20

With all of this being said, there is obviously a high likelihood of noise and trouble, so it is probably best to step to the sidelines in the short term. The ¥135 level underneath should offer significant support, and therefore it is worth paying attention to. Beyond that, it is also possible that Sunday has an announcement that is relatively positive and sends the British pound right back up. That being said, I have to admit that I am more pessimistic now that I was just a week ago, but at the end of the day it seems as if the British pound always has buyers regardless of what happens so we will have to wait and see.

The rule of “staying out when in doubt” most certainly applies in this scenario, and with that being the case I think simply observing over the next couple of sessions probably is the smartest things you can do.

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