The British pound has rallied significantly during the trading session on Tuesday to reach towards the ¥132 level. At this point, the market is likely to see a lot of selling pressure as it was previous support. Furthermore, you have to keep in mind that the global situation is tenuous at best, and that generally favors the Japanese yen for safety. The last couple of days have been a bit over-the-top, mainly based upon the potential of an eight person study to bring some type of vaccine to the world. Even if that were the case, it is probably at least two years away, and from a historical standpoint four years is probably a little closer to the reality.
GBP/JPY Video 20.05.20
Regardless, there is a lot of noise above and therefore I would be fading short-term rallies and recognize that we will probably go back towards the ¥130 level. Quite frankly, we would need to clear the ¥135 level to be in the “all clear” for buying from a longer-term standpoint, so I certainly believe that it is only a matter of time before we get an opportunity to get short again. You will probably notice this on short-term charts, but I do recognize that it is only a matter of time before we get yet another headline to throw the markets around. That is the nature of things recently, so by all means make sure that your position size is reasonable and of course your stop losses are in place.
This article was originally posted on FX Empire