GBP/JPY Forecast – British Pound Continues to Flex its Muscles

GBP/JPY Forecast Video for 22.08.23

British Pound vs Japanese Yen Technical Analysis

The British pound has rallied significantly during the course of the trading session on Monday, as the ¥185 level is now in the review mirror. It looks as if it is going to end up being a bit of a short-term floor in the market, but at this point it looks like we are trying to break above the highs that we made last week, and if and when we do, that opens up the door to a much higher pricing. At that point, I think we’ve got a situation where the market goes looking to the ¥200 level. Underneath, the ¥185 level will continue to attract a lot of attention.

Looking at this chart, the market is likely to see a lot of noisy behavior, and therefore I think you got a situation where you need to be cautious with your position size, but I certainly think that this is a “one-way trade” as far as this is concerned. In general, I think this is a market that will eventually reach much higher, but it doesn’t necessarily mean that it’s a one-way shot, due to the fact that you need to be cautious about going “all in.”

If we were to turn around and break down below the Friday session, then it’s possible that we could drop down to the 50-Day EMA, which is a longer-term indicator that a lot of people will pay close attention to, and it could be the bottom of the floor at the moment, if not, I think it’s the ¥180 level. In general, we continue to see the interest rate differential drive this market much higher, as the Bank of England continues to fight inflation, and at the same time the Bank of Japan continues to try to keep its interest rates lower, therefore it makes quite a bit of sense continue to see the Japanese yen struggle. Because of this, I think we’ve got a situation where the Japanese yen continues to get hammered against not only the British pound, but other currencies around the world as well. In general, this is a “buy on the dips” market.

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