GBP/JPY Forecast – British Pound Pulls Back Against the Yen

GBP/JPY Forecast Video for 02.11.23

British Pound vs Japanese Yen Technical Analysis

The British pound has pulled back a bit during the trading session on Wednesday, perhaps in a bit of profit-taking as the market got overextended due to the Bank of Japan flinching during its interest rate announcement. Because of this, I think the Japanese yen will continue to lose ground against most currencies, but the market may have moved a little too far in a very short amount of time. Because of this, the market is likely to continue to see buyers on dips, especially with the 50-Day EMA just below.

Ultimately, if we turn around and rally at this point, it’s likely the market goes looking to the ¥185 level above, which is a large, round, psychologically significant figure and an area where we have seen a lot of resistance. Underneath, the ¥181 level continues to offer support, with the ¥180 level offering quite a bit of support. The large, round, psychological significant figure is likely to attract a lot of attention if we do pull back to that area, and right now it offers a bit of a “floor in the market.”

As long as the Bank of Japan continues to see reasons to keep the monetary policy loose, it’s likely that the market will continue to be negative on the yen, so I think at this point you’re looking for signs of support on short-term charts to get long again. The area above of course continues to be very noisy, but I do think eventually we break out of it. Once we do, then the market is likely to go look into the ¥190 level, possibly even ¥200 over the longer term. All things being equal, this is a market that I have no interest in shorting anytime soon, as the Japanese yen continues to be the weakest of all of the major currencies. While the British pound is also weak, the reality is that this is a fight between a currency that is negative in the form of Sterling, but absolutely toxic in the form of the Japanese yen. Because of this, there just is no way to get short of this market.

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