GBP/JPY Forecast – British Pound Continues to Search for a Bottom Against Yen

GBP/JPY Forecast Video for 26.07.23

British Pound vs Japanese Yen Technical Analysis

In Tuesday’s trading session, the British pound underwent a pullback against the Japanese yen, yet it remains well within a consolidation phase. Market analysis suggests that buyers may reenter the market, with a particular interest in the ¥180 level, known for its historical reliability as a support zone. Furthermore, the proximity of the 50-Day Exponential Moving Average to this area adds weight to the possibility of a significant bounce.

The British pound has stood out as a robust currency compared to other major currencies, thanks to the Bank of England’s proactive measures to combat significant inflation pressures. This strength contrasts with the Bank of Japan’s strategy of quantitative easing, aimed at maintaining low interest rates, which has contributed to the depreciation of the Japanese yen.

In the event of a breakdown below the 50-Day EMA, the British pound could face a decline towards the ¥175 level. This level has previously acted as a launching point for upward momentum and remains a critical support level.

Conversely, should the market turn around and witness an upward surge beyond the ¥183 level, it opens the path to potential gains towards ¥184 and even ¥185, with the latter becoming the intermediate target. Surpassing this level might lead to further appreciation, and some market participants may even have their sights set on the ¥200 level in the long run, though such an achievement may prove challenging.

The Japanese yen’s struggles can be traced back to the country’s long-standing experiment with quantitative easing, which has had significant consequences in the Forex markets. Consequently, a bearish sentiment prevails among some traders towards the Japanese yen.

The recent pullback of the British pound against the Japanese yen has placed the currency pair in a consolidation phase, attracting the attention of potential buyers. The ¥180 level, reinforced by the 50-Day EMA’s proximity, is a pivotal point of interest. The strength of the pound is a reflection of the Bank of England’s actions to combat inflation, while the yen continues to face the repercussions of prolonged quantitative easing. As the market unfolds, there is the potential for both upward and downward movements, contingent on key support and resistance levels. Traders will closely monitor these levels to make informed decisions as they navigate the evolving Forex landscape.

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