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GBP/JPY Forecast – British Pound Pulls Back Against Yen Despite an Interest Rate Hike

GBP/JPY Forecast Video for 12.05.23

British Pound vs Japanese Yen Technical Analysis

The British pound has pulled back just a bit against the Japanese yen. during the trading session on Thursday, even though the Bank of England has added 25 basis points to the interest rate in that country. That being said, it was widely known that this would happen, so there was no real surprise here. However, we are already starting to see the market turnaround, so it is only a matter of time before we reach the highs again. This has been a “buy on the dip” type of market for a while, which is more likely than not to be the case in the future. Ultimately, I think the market will get looking to the ¥170 level above, which of course, is a large, round, psychologically significant figure and an area that many people would pay close attention to.

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Underneath, there is a hammer that formed at roughly ¥168, and I think that offers a short-term support level that a lot of traders will be paying attention to. If we were to turn around and break above the ¥71 level, then it opens up the possibility of a move to the ¥172.50 level, which of course, was the most recent high. At that point, the market could go as high as the ¥175 level, which I do think is the longer-term target for this market.

However, if we were to break down below the ¥167.50 level, ostensibly below the bottom of the hammer, the market could go down to the 50-Day EMA, which is near the ¥166 level, which would be supported by technical analysis as well. All things being equal, this is a market that I think continues to find plenty of buyers but that doesn’t necessarily mean it will be very noisy and difficult at times. Regardless, I certainly would not be selling this market, it is far too strong in general and I don’t see that changing anytime soon as long as there is a massive interest rate differential between Great Britain and Japan, which of course will remain as long as the Bank of Japan keeps its yield curve control policy in effect.

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

This article was originally posted on FX Empire

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