GBP/JPY Forecast – British Pound Recovers After Initial Dip

GBP/JPY Forecast Video for 07.07.23

British Pound vs Japanese Yen Technical Analysis

The British pound has shown itself to be very resilient during trading on Thursday, after initially falling quite drastically during the trading session. The market will turn around and look likely to break out to the upside, especially as the Friday session will feature the Non-Farm Payroll number, which throws a lot of volatility in the market. Keep in mind that this pair is very sensitive to the overall risk appetite markets in general, but as you can see, there is obviously a lot of support underneath that will continue to attract attention. Resiliency is something that needs to be paid close attention to, and I do think that it is probably only a matter of time before we truly take off to the upside.

If we were to break down below the bottom of the candlestick, that would obviously be very negative, but I don’t see that happening very easily. The ¥180 level underneath should continue to be massive support, and therefore I think it is essentially the “bottom of the market.” Because of this, I think you’ve got a situation where you need to look at this through the prism of “buying on the dips”, and of course the Bank of Japan continues to see a lot of reasons to keep its monetary policy very loose, and it certainly looks as if we are holding a lot of pressure just under the surface, much like a beach ball being released after being held under water. I do think that once we do break out to the outside, the 185 level will be targeted rather quickly.

It’s not until the Bank of Japan changes its overall monetary policy that I would think about shorting this pair, and currently I believe that the British still have a lot of inflation to fight, so therefore I think you have to look at it through interest-rate differential and monetary policy differences that should continue to keep this market going higher. Yes, we are a bit stretched, so we may have to hang about and work off some excess froth.

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