The British Pound Continues to Break Higher

British Pound vs Japanese Yen Weekly Technical Analysis

The British pound has rallied rather significantly during the course of the trading week to break above the ¥160 level. By doing so, the market has suggested that we are going to break much higher, but ultimately the market breaking above there might be a bit too much in such a short amount of time, so we may get a little bit of a pullback. After all, this has been a very parabolic move, and it does suggest that we are overdone.

The ¥157.50 level underneath could be supported as it was previous resistance. Ultimately, this is a market that I think continues to try to go higher based upon the fact that the interest rate differential is so high. Interest rates are rising everywhere, and the Bank of Japan might be the one bank that could do something to keep rates suppressed. Having said that, the interest rate differential will continue to be a major suggestion.

All things being equal, the market is likely to continue to see buyers, but if we were to turn around a break down below the ¥155 level, it could cause some serious issues. Ultimately, this is a market that is almost impossible to short anytime soon, so I think we will continue to see traders pickup value any time it offers itself available.

The size of the candlestick is something worth paying attention to because it shows a real conviction to the upside. However, pullbacks will more likely than not end up being just as vicious at times, because these runaway markets do tend to have massive reactions when large traders take profits. At this point, the Japanese yen continues to suffer against everything.

GBP/JPY Technical Analysis Video 28.03.22

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