GBP/JPY Price Forecast – The British Pound Fell Hard Against the Japanese Yen on Thursday

British Pound vs Japanese Yen Technical Analysis

While most of you know that the GBP/JPY pair is highly sensitive to risk appetite, what you’re not paying attention to would more likely than not be the bond markets. As we have seen over the last several months, every time interest rates rise, the Japanese yen gets pounded. The reason for this is that the Bank of Japan continues to step in and defend the 0.25% yield on the 10-year Japanese Government Bond. That’s essentially the same thing as printing more currency, so it weighs upon the value of the Japanese yen.

As yields rose, other currencies performed much better in relation to the Japanese yen because the other central banks around the world are tightening. However, when bond yields dropped globally, that puts less pressure on the Japanese to step in and defend their bond, and therefore they may not need to print as much in the way of currency. With that being said, this is a market that if you choose to trade it, you need to pay close attention to the 10-year yield in the United States as a measuring stick. However, you are probably better off paying attention to Germany, Japan, the United States, and Great Britain to get a good look as to where we go next.

From a technical analysis standpoint, it looks to me like the ¥160 level underneath should be a significant floor in the market, not only due to the fact that we’ve seen buyers there but also the fact that the 200 Day EMA is sitting right there as well. Ultimately, this is a market that I think continues to see a lot of back and forth.

GBP/JPY Price Forecast Video for 12.08.22

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