Yahoo Finanza GBP/JPY Forecast – British Pound Pulls Back Slightly Against the Japanese Yen
GBP/JPY Forecast Video for 10.05.23
British Pound vs Japanese Yen Technical Analysis
The British pound has shown itself to be rather resilient over the last several weeks but pulled back ever so slightly during the trading session on Tuesday to test the ¥170 level. Alternatively, the ¥170 level is an area that will continue to pay close attention to, and binds ultimately, we will likely continue to see a lot of choppy volatility, with more of a push to the upside.
To the upside, the ¥171.20 level is an area where we had seen resistance over the last day or so, but ultimately, I think this is a situation where we will continue to see the market trying to reach the ¥172.50 level. Any pullback at this point would just be a simple value proposition as traders are looking to pick up “cheap British pounds.” Keep in mind that the United Kingdom is currently suffering quite a bit of inflation, and it’s probably worth noting that an interest rate decision is coming soon, so it all comes together.
That being said, the Bank of Japan continues to choose a path of quantitative easing, as they have a limit of 50 basis points on their interest rates for the 10-year JGB. As long as that’s going to be the case, there is a huge possibility that the Bank of Japan will continue to throw Japanese yen into the market, as they have to print those yen to buy bonds to keep those interest rates low. Alternatively, the Bank of England now has to deal with inflation and, therefore, more likely than not will continue to raise interest rates, so that of course puts a little bit of momentum into the British pound as well.
In fact, this makes this a bit of a “perfect storm” for the pair to continue to go higher. That being said, if the market was to break down from here, the 50-Day EMA sits right around the ¥166 level, and I think that would be the support level underneath that would define the trend. All things being equal, this is a situation where we see a “buy on the dip” market.
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This article was originally posted on FX Empire
