GBP/JPY Forecast – British Pound Breaks Back Above ¥160

GBP/JPY Forecast Video for 10.01.23

British Pound vs Japanese Yen Technical Analysis

The British pound has rallied significantly during the trading session on Monday, breaking above the crucial ¥160 level, an area that has a lot of psychology attached to it. By breaking above that, does show that we have some strength, but I also recognize that we have a scenario where the market breaking back down below there would be rather bearish. It is worth noting that we gave back quite a bit of the gain by the time New York came back online, but breaking through the short-term highs at the ¥160 level is a strong sign.

Short-term, I believe that this market should see a little bit of support at that ¥160 level on short-term charts. Ultimately, I believe this market will continue to be very noisy, but it’s probably a situation where it’s all going to be based upon the bond market more than anything else. Remember, the Bank of Japan is doing everything it can to keep interest rates in the 10 year note down to 50 basis points. The only way to do that is to print yen and buy bonds.

So as long as the interest rates continue to test the 50 basis points level in the 10 year JGB, the Japanese yen has the potential of getting hammered again. Alternatively, if the interest rates pullback from the 50 basis points level, then it’s likely that the Japanese yen will strengthen against multiple currencies. At this point, it looks like it’s a pretty significantly fair fight so expect more volatility in general.

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