GBP/JPY Forecast – British Pound Rallies Against Japanese Yen

GBP/JPY Forecast Video for 23.11.23

British Pound vs Japanese Yen Technical Analysis

The British pound initially pulled back a bit during the early hours on Wednesday against the Japanese yen, only to turn around and show signs of life. This should not be a huge surprise considering we have formed a couple of hammers on the daily chart ahead of that, and of course we continue to hang on to the ¥185 level as potential support. Speaking of the ¥185 level, we also have the 50-Day EMA sitting just below there and rising, so that very well could end up being a bit of a floor in the market.

At this point, I do think that you continue to buy dips, because quite frankly this is a pair that is backed up by a huge interest rate differential, and you do get paid to hang onto it. I think a lot of traders are still doing that, with their eyes on ¥187.25 above, and then possibly the ¥188.30 level after that, where we had peaked recently. If we break above there, then it is likely that the market could go looking to the ¥190 level, which I still think is a target over the longer term.

Short-term pullbacks should be buying opportunities, and I think that’s what we are seeing later in the day. We will have to wait and see whether or not to support underneath holds, but so far it looks like it will. Remember that this market has been in a huge uptrend for quite some time, and I just don’t see how that changes anytime soon. The Bank of Japan is trying to jawbone the market back down, but at the end of the day, they cannot tighten too much, due to the fact that there is a ton of debt in Japan, and ultimately this is a situation where the Japanese will have to pay far too much in the way of interest if they do start raising rates. With this, I think any move by the Bank of Japan will be subdued at best. Remember, you still get paid to hang onto the pair, so I think a lot of people will remain long.

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